France is capital abundant and Italy is labor abundant. Shoes are labor intensive and wheat is capital intensive
Draw diagrams to illustrate the pre- and post-trade equilibria for each of the two countries including the production points, the consumption points, the international price, and the volumes of exports and imports for each. Be sure to identify which country has comparative advantage in which good. Which factors gain and which lose when trade is opened between the two countries? Explain carefully.
France
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The demand for capital by a firm is based on the demand for the product that the capital produces. This relationship is referred to as
A. cost minimization. B. resource utilization. C. derived demand. D. product demand.
Which is the most likely effect upon the market for cotton of an increase in production costs due to higher oil prices?
A) A decrease in demand and hence a decrease in both the price of cotton and the quantity exchanged. B) A decrease in supply and hence a decrease in both the price of cotton and the quantity exchanged. C) A decrease in supply and hence an increase in the price of cotton and a decrease in the quantity exchanged. D) A decrease in both supply and demand and hence a decrease in the quantity exchanged but no predictable change in the price of cotton.
The ability of an economy to produce greater levels of output in the same period of time is called:
a. positive economics. b. negative economics. c. economic growth. d. marginal productivity.
A market demand curve:
a. is the sum of the demand curves of all the individuals in a particular market. b. is determined by the demand of those who purchase in quantity. c. is always horizontal. d. cannot be estimated. e. never includes demand by the government.