The United States can use all of its resources to produce 50 computers or 4,000 shoes. Suppose that at world market prices, one computer exchanges for 100 shoes. Explain how the United States can gain from trade
What will be an ideal response?
In the United States, the opportunity cost to produce 1 computer is 80 pairs of shoes. The United States can then sell the computers on the world market for 100 shoes each and thereby be ahead by 20 shoes per computer.
You might also like to view...
When disposable income is zero, consumption expenditure is
A) also zero. B) negative. C) equal to induced consumption expenditure. D) equal to autonomous consumption. E) None of the above answers is correct.
From the new classical perspective, the disinflation in the early 1980s resulted in a significant recession because
a. the policy change to disinflation was unanticipated. b. the policy was not credible. c. inflationary expectations were backward looking. d. None of the above e. both a and b.
A production possibilities curve shows the
a. dollar costs of producing two different goods b. amounts of labor and capital needed to produce one good c. various combinations of goods that can be produced d. prices of different goods that are produced in an economy e. inefficient use of available resources and technology
In the market for bank credit, a large bank sometimes announces a change in interest rates. After the changes in interest rates are announced, other banks in the industry usually react by changing their rates in the same way. This is an example of:
A. monopolistic competition. B. implicit collusion. C. the kinked demand curve model. D. a cartel.