Norway has a long coast that borders on the north Atlantic and is more productive in fishing. Sweden has a greater endowment of capital and is more productive in automobile. Assume the two countries trade each other, with Norway…
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Sweden has comparative advantage in Volvos while Norway has a comparative advantage in fish. The free trade relative price is different from the autarkic relative price and thus both countries gain. Both countries specialize in their comparative goods and thus they gain. The minimum expenditure that is needed to attain the autarkic level of utility at autarkic prices is lower than the minimum expenditure required in achieving the free trade level of utility at autarkic prices.
The external economies of scale are important in production of semiconductors and the industries are concentrated in certain locations. Thus if a semiconductor industry is established in a certain location, the export of semiconductors by the country will not be due to comparative advantage but the economies of scale.
It is true, and Scotch only comes from Scotland since it requires skilled distillers who are mostly found in the region. The region also features favorable climatic and soil conditions for the grains used in the production of scotch.
The production subsidy creates an imaginary shift of the supply curve to the right since producers are willing to supply larger quantities at every price due to the subsidy. The rightward shift crosses the $10 line at the quantity, 170 and producers gain in the area, which is given by (120x5) + (50x5/2)= 725, the government will lose an amount = (170x5) = 850 and the social benefit = (10x50) = 500
Goldberg, Linda S., Michael W. Klein, Jay C. Shambaugh, and Paul R. Krugman. Study guide to accompany International economics, theory and policy, sixth edition, Paul R. Krugman, Maurice Obstfeld. Boston, Mass.: Addison Wesley, 2003. Web. 8 July 2014
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The ability to maximize one’s profit is key. One theory is that this success might have to do with the fact that, according to Png and Lehman (2007), “[t]he profit-maximizing scale of operation is where marginal revenue equals marginal cost” (pp. 203).
It mainly occurs when there is an extensive increase in the supply of the money within the economy which is not balanced with the growth of Gross Domestic Product (GDP) of a particular economy. As a result, there occurs an imbalance in the supply and demand, relative to the revenue of the country.
Here, in this case, autonomous consumption expenditures, autonomous investment totals, autonomous government expenditures and autonomous net export expenditures amounted to 5000, 500, 2000 and -600 respectively. Therefore, the equilibrium value of real income in this economy will be [5000+500+2000+(-600)] = 6900.
Therefore, the phrase or statement, “Fast Money Raises My Interest”, can be explained in terms of the Fisher Equation and the quantity of money theory to mean that as money changes hands fast, or frequently-when the velocity is high, results in a high demand for money; that is what “raises my interest implies.
Since a gold standard requires that the value of currency be fixed in terms of gold, for example an ounce of gold being worth $20 and 60 cents, then gold had to be sort and brought to the central bank so that it
The stock market of American S&P 500 given in the graph below, predicts recession since the prices of stocks were stable and steadly growing until 2002-2003 and also in the year 2008-2009. These years were characterized by
imals from the animal shelter are, the more the elastic demand while the lesser the substitutability of these animals from the animal shelter, the lesser the demand would be elastic.
2. When demand is elastic, price and total revenue relate inversely. As such, when the prices
ries will remain unaffected; however, the exporting prices will remain lower than importing prices; hence, the importing country is likely to make high profits compared to the exporting country. Unless the production costs in the producing country have changed rather decreased,
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