Use the above table. Assuming constant opportunity costs, if countries Alpha and Beta specialize based on comparative advantage, then
A) Alpha should specialize in knives and Beta should specialize in forks.
B) Alpha should specialize in forks and Beta should specialize in knives.
C) Alpha should specialize in producing both items.
D) Beta should produce both items.
A
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Assume the government decides to impose a per-unit tax on a good produced in a perfectly competitive market
a. Graphically illustrate the short-run effects of the tax on the cost conditions faced by a representative firm in the market. b. Explain the adjustment process to long-run equilibrium in the market. What has happened to long-run equilibrium price and output as a result of the tax? What has happened to the number of firms in the market? Why?