List some benefits of international trade
The benefits associated with opening domestic markets to international trade are as follows:
o Trade agreements are often reciprocal. That is, if a country opens domestic markets to imports, markets in other nations are opened to its exports.
o The variety of goods and services available in the market increases.
o International trade allows companies to sell to larger markets and gain economies of scale. That is, larger production levels can potentially lower the average cost of production per unit produced, and these cost savings help lower overall prices.
o International trade enhances the flow of ideas and increases multicultural awareness. As a result, there is an expansion of overall knowledge in society, which increases the rate of new product development, scientific advancements, and cultural understanding. All of these factors increase the opportunity for economic growth and the increased welfare of societies.
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Which of the following statements is true?
a. Monopoly results in smaller output and a higher price than would be the case under perfect competition. b. The monopolist produces at an output where P > MC and the marginal value to society of the last unit produced is greater than its marginal cost. c. The monopoly is not producing enough output from society's standpoint. d. Monopoly may lead to greater concentration of economic power and could retard innovation. e. All of these statements are true.
The key distinction between risk and uncertainty is
a. Risk cannot be quantified, priced or traded b. Uncertainty refers to not knowing possible outcomes or their probabilities c. Uncertainty is modeled by listing the possible outcomes and assigning probabilities to the outcomes d. Risk has to do with not knowing the probability distribution of a random variable