The U.S. has the largest trade deficit with China. How will a ban on trade with China affect the current account of the U.S.?
What will be an ideal response?
Ending all trade with China might do little to the overall U.S. trade deficit. It depends upon whether the purchases that the United States made from China simply shift to other foreign suppliers of the same kinds of goods, for example Vietnam. In fact, lots of developing countries now produce the manufactured goods that the US currently imports from China. If U.S. consumers switched their purchases of Chinese exports to other foreign countries, the overall U.S. trade deficit may not change at all. In other words, the U.S. trade deficit has a lot to do with the decisions of U.S. consumers, and relatively little to do with the particular trading partners from whom they buy laptops and printers.
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Refer to Figure 12-4. If the market price is $30 and if the firm is producing output, what is the amount of its total variable cost?
A) $7,200 B) $6,480 C) $5,400 D) $3,960
Assume an analyst has been hired to estimate the price elasticity of demand for hamburger (which sells for about $2.30 per pound) and filet mignon (which sells for about $20 per pound), respectively
Considering the different determinants of the price elasticity of demand and assuming the consumers in both markets have approximately the same incomes, we would expect the coefficient of price elasticity of demand in absolute value to be: A) larger for hamburger than for filet mignon. B) larger for filet mignon than for hamburger. C) approximately the same for both hamburger and filet mignon. D) none of the above because different determinants would have opposing effects on the two estimates.