Discuss the concept of the globalization of production.
What will be an ideal response?
Answer: The globalization of production refers to the souring of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production. These factors of production include labor, energy, land, and capital. This helps companies lower their overall cost and improve the quality of their products. An example in the book includes Boeing's 777. Japanese, Singapore, Italy, and other foreign suppliers created 30% of the 777. They claim their outsourcing is good because their suppliers are the "best in the world at their particular activity."
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In comparing the changes in TVC and TC associated with an additional unit of output, we find that:
A. no generalization about the changes in TC and TVC can be made. B. the changes in TC and TVC are equal. C. the change in TC is greater than the change in TVC. D. the change in TVC is greater than the change in TC.
In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts.
Which diagram above illustrates the effect on the natural-gas market, with the widespread use of "fracking" or hydraulic fracturing by gas-drilling companies?
A. (1) B. (2) C. (3) D. (4)
The short-run aggregate supply curve is vertical
Indicate whether the statement is true or false
Assuming demand is inelastic, if a firm wants to increase its total revenue, it should raise price
Indicate whether the statement is true or false