Based on Scenario 1 above critically evaluate the following statement. "Because of the disparities in skills between these two men it will not be beneficial for them to trade with one another."
What will be an ideal response?
Despite the fact that the younger man has absolute advantage in all activities, it is not in the interest of either of them to work in isolation since they both can benefit from specialization and exchange. If the two men divide the work according to comparative advantage then the young man will specialize in tasks at which he is most productive, while the older man will concentrate on tasks where his productivity is only a little less than that of the young man. Such an arrangement will increase total production for a given amount of labor supplied by both men and it will benefit both of them.
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Given the market demand and cost data in the above figure, the existence of a monopoly firm producing 8 million cubic feet of natural gas makes it possible to produce natural gas at a long-run average cost of
A) 10 cents per cubic foot. B) 20 cents per cubic foot. C) 30 cents per cubic foot. D) 40 cents per cubic foot.
The business cycle component of the log of real per-capita GNP is equal to
A) log of actual real GNP - log of trend GNP. B) log of trend GNP ÷ log of actual real GNP. C) log of trend GNP - log of actual real GNP. D) log of actual real GNP ÷ log of trend GNP.
Which of the following is true in long-run equilibrium for both perfect competition and monopolistic competition?
a. Accounting profit is zero. b. Marginal cost equals price. c. Long-run average cost is at a minimum. d. Economic profit is zero.
If demand is elastic, a rise in price will decrease total expenditure
a. True b. False Indicate whether the statement is true or false