What is the law of comparative advantage, and why is it important in international trade?
The law of comparative advantage states that aggregate output is maximized when countries specialize in the production of goods for which they are the lowest opportunity cost producer, and then trade for other goods. Tit explains how countries can improve their situation through trade, rather than producing all goods themselves.
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If marginal benefit is equal to marginal cost, then the
A) producer surplus is equal to the consumer surplus. B) sum of producer surplus and consumer surplus is as large as possible. C) sum of producer surplus and consumer surplus equals zero. D) market has squeezed out total surplus so that it equals zero. E) deadweight loss is more than zero but less than its maximum.
The labor force participation rate equals the
A) (labor force divided by the number of people not in the labor force) × 100. B) (number of employed divided by the labor force) × 100. C) (labor force divided by working-age population) × 100. D) (labor force divided by the total population) × 100.