Suppose that two countries, A and B, employ the same technology in the production of a good. External economies of scale apply in both countries
Analyze the effects of trade on long-run production levels if country A has a comparatively lower cost of production when trade begins.
Initially, country B will have a comparative advantage in production of the good. Over time, as production shifts to Country B, costs will decline there while increasing in country A. In the absence of market intervention, country B will have a monopoly. Note that no individual firm will have a monopoly unless internal economies of scale also apply.
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Between 1914 and 1920, the US price level ______________
a. fell dramatically. b. nearly doubled. c. rose and fell in accordance with intensity of the war. d. remained relatively stable.
To be effective, an import quota must
a. reduce the price and increase the quantity of imports b. set the price of the imported good higher than the domestic equilibrium price c. restrict imports to less than would be imported under free trade d. restrict imports to less than exports in trade with that particular country e. be directed at the product of a specific country
Apple is an American company, but its iPhones are assembled in China. The sale of each iPhone then is counted in US GDP as:
A. consumption. B. investment. C. an import. D. an export.
The production possibilities frontier illustrates
A. the fundamental fact of scarcity. B. the opportunity cost of acquiring more of one good. C. maximum output utilizing all resources efficiently. D. All of the responses are correct.