Why should an economy specialize and trade according to its marginal cost advantage or comparative advantage?
Individuals and nations should specialize and trade according to comparative advantage because it ensures an efficient use of resources and benefits both trading partners by allowing them to consume more than what is domestically produced.
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Explain why many fishermen on a commonly owned lake continue to fish until the revenue from the average catch is equal to the marginal cost of fishing -- and why the same is not true for a firm that employs fishermen to fish on a privately owned lake.
What will be an ideal response?
Market share is the percentage of total
A. Market output produced by the four largest firms in an industry. B. Industry profit earned by a single firm. C. Market output produced by a single firm. D. Market output produced by the largest firm in an industry.
Refer to Table 19-21. Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2016, using 2014 as the base year. Show your work
What will be an ideal response?
You read a story in the newspaper announcing the proposed merger of Dell Computer and Gateway. The merger is expected to greatly increase Gateway's profitability. If you decide to invest in Gateway stock, you can expect to earn
A) above average returns since you will share in the higher profits. B) above average returns since your stock price will definitely appreciate as higher profits are earned. C) below average returns since computer makers have low profit rates. D) a normal return since stock prices adjust to reflect expected changes in profitability almost immediately.