Explain how importing bed linens can be beneficial to the domestic economy.
What will be an ideal response?
Answers will vary but should refer to a net gain in domestic wealth by consumers. Importing bed linens is considered beneficial to the economy because it results in a net gain in domestic wealth. Because other countries have a comparative advantage in bed linen production, the world market price of bed linens is lower than the domestic price, and a gap will exist between the number of bed linens domestic producers will supply at the lower world price and the consumer demand for bed linens. This gap is filled by the lower-priced imports. The negative impact of lower pricing and competition on domestic producers is offset by consumer gains and leads to a net gain in domestic wealth.
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The nominal GDP of Year 2 is
A) $800. B) $1050. C) 1900. D) $2400.
The long run is a period of:
a. at least one year. b. sufficient length to allow a firm to expand output by hiring additional workers. c. sufficient length to allow a firm to alter its plant size and capacity and all other factors of production. d. sufficient length to allow a firm to transform economic losses into economic profits by hiring better workers.
Refer to the above graph. A decrease in supply would best be reflected by a change from:
a. Point 2 to point 1 b. Point 3 to point 6 c. Point 5 to point 2 d. Point 5 to point 1
Answer the following questions true (T) or false (F)
1. Both U.S. Congress and the Executive Branch share responsibility for the formulation of U.S. trade policy.