Explain the concepts of absolute advantage and comparative advantage. Is it possible for a firm to have an absolute advantage in producing something without having a comparative advantage? Why or why not?
What will be an ideal response?
Absolute advantage refers to the ability to produce a good using fewer resources than someone else. Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer. Yes, a firm can have an absolute advantage without having a comparative advantage. A firm may be able to produce more of a good or service than its competitors, but that does not necessarily mean it can produce the good or service at a lower opportunity cost than its competitors.
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If the government overcorrected in a situation of external costs a. More than the efficient amount of the good would end up being produced. b. Less than the efficient amount of the good would end up being produced. c. It would result in a welfare cost in that market
d. Both b and c are would result.
A natural correction to employer discrimination in market economies is the
a. threat of judicial review. b. profit motive. c. political process. d. union movement.
When external benefits are present, the market price is ________, however when external costs are present, the market price is ________.
Fill in the blank(s) with the appropriate word(s).
In a competitive market,
A. Neither buyers nor sellers have market power. B. Buyers and sellers both have market power. C. Sellers don't have market power but buyers do. D. Buyers don't have market power but sellers do.