Politicians often argue that a country's standard of living is reduced when it allows imports into the country. Offer an economically sound counter-argument
What will be an ideal response?
Specialization of labor is productive, so output is greater when people produce goods for which they have a comparative advantage—that is, goods for which the opportunity cost of producing is lower than in other nations. They trade for those goods for which they do not have a comparative advantage. International trade based on comparative advantage then increases total output of the two countries and can result in higher standards of living for citizens of both countries.
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What is a network externality?
A) It refers to a product that requires connection to a network for it to be useful. B) It refers to a situation in which a product's usefulness increases with the number of people using it. C) It refers to having a network of suppliers and buyers for a good or service. D) It refers to lobbying to form a public enterprise.
Price discrimination is a rational strategy for a profit-maximizing firm when
A) it is possible to engage in arbitrage across market segments. B) there is no opportunity for arbitrage across market segments. C) it is not possible to segment consumers into identifiable markets. D) firms want to increase the amount of consumer surplus received by its customers.