If a scale economy is the dominant technological factor defining or establishing comparative advantage, then the underlying facts explaining why a particular country dominates world markets in some product may be pure chance, or historical accident
Explain, and compare this with the answer you would give for the Heckscher-Ohlin model of comparative advantage.
This statement is true, since the reason the seller is a monopolist may be that it happened to have been the first to produce this product in this country. It may have no connection to any supply or demand related factors; nor to any natural or man-made availability. This is all exactly the opposite of the Heckscher-Ohlin Neo-Classical model's explanation of the determinants of comparative advantage.
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If the interest rate in the United States rises
A) investors increase their demand for dollars and the U.S. exchange rate appreciates. B) investors increase their demand for dollars and the U.S. exchange rate depreciates. C) investors decrease their demand for dollars and the U.S. exchange rate appreciates. D) investors decrease their demand for dollars and the U.S. exchange rate depreciates.
Mary decides to withdraw $500 out of her checking account. The impact of this transaction on the Banking System's balance sheet will be to:
A. only reduce reserves by the required reserve rate times $500. B. only reduce checkable deposits by $500. C. decrease reserves and checkable deposits by $500 respectively. D. increase reserves and reduce checkable deposits by $500 respectively.
The factors of production are the:
A. list of inputs required for a given durable good. B. ingredients that go into making any good or service. C. costs and benefits of a given production process. D. outputs that society as a whole have chosen to produce.
Suppose the price of a product rises and the total revenue of sellers increases.
What will be an ideal response?