What is theory of comparative advantage
What is theory of comparative advantage? Which country should be importing goods and which country should be exporting goods.
What happens to the consumer surplus, producer surplus and total surplus when a country imports? Also explain what happens to consumer surplus, producer surplus and total surplus when a country exports?
3. Refer to the graph below:
Suppose the world price in this market is $10 per unit. Further assume that government imposes a tax of $20 per unit. Calculate consumer, producer and total surplus with free trade. Also calculate the welfare after the imposition of taxes. Analyze your results.
Distinguish between explicit and implicit costs. Also provide an example of both these costs. How does these costs affects the accounting and economic profits?
Calculate the missing values in the table below.
Labor
Output
Marginal
Product
Variable
Cost
Fixed
Cost
0
0
$0
$5
1
100
100
$5
$5
2
250
$10
$5
3
350
$15
$5
4
50
$20
$5
5
25
$25
$5
6
430
$30
$5
…………………Answer preview……………………..
The theory of comparative advantage states that if a country specializes at producing products where they have a lower opportunity cost, then there will be an increase in economic welfare. The country that should be importing goods is one that has a higher opportunity cost and the one that should be exporting is the one with a lower opportunity cost……………………
APA
249 words
