Explain the difference between comparative advantage and absolute advantage. Give an example of each.
What will be an ideal response?
Student examples will vary. A sample response follows. Comparative advantage refers to being able to produce something at a lower opportunity cost, whereas absolute advantage refers to being able to produce something using fewer resources. For example, I’m a weightlifter, so I am stronger than the other employees at the fast food restaurant where I work. I have an absolute advantage in moving boxes from the stock room to the kitchen. I am also better at both speaking Spanish and making burgers quickly than my coworker Katie, who often works the same shift I do. However, Katie is much worse at speaking Spanish than she is at making burgers quickly. Therefore, I have a comparative advantage at speaking Spanish, so I usually take orders, and she has a comparative advantage at making burgers, so she usually cooks.
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Answer the next question on the basis of the following demand schedule.PriceQuantity Demanded$615243342516The price elasticity of demand is unit-elastic (based on the midpoint formula)
A. over the entire $6 to $4 price range. B. over the entire $3 to $1 price range. C. throughout the entire price range because the slope of the demand curve is constant. D. in the $4 to $3 price range only.
All of the following entry methods provide firms with familiarity with a foreign market, expect which one?
A) partnership B) merger C) independent entry D) joint venture
If demand is inelastic, marginal revenue will be
a. positive. b. zero. c. negative. d. constant.
Holding everything else constant, a country's imports will decrease if the:
A) country's currency appreciates.
B) country's currency depreciates.
C) country's currency is revalued.
D) none of the above.