What is meant by optimization? How does optimization by levels differ from optimization by differences?
What will be an ideal response?
Optimization is the process that describes almost all of the choices that people, households, businesses, and governments make. Since resources are scarce, people need to make choices. Choices involve tradeoffs. Optimization involves studying these tradeoffs and making the best possible choice. Optimization in levels analyzes the total net benefit of different alternatives while optimization in differences analyzes the change in net benefits when you switch from one alternative to another. Optimization in levels and optimization in differences always yield the same answer.
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The De Beers Company blocked competition
A) by controlling the supply of most of the world's high-quality bauxite, the mineral used to produce aluminum. B) in the diamond market by controlling the output of most of the world's diamond mines. C) in the market for fresh and frozen cranberries because it controls about 80 percent of the cranberry crop. D) because it has lower production costs than other department stores due to economies of scale.
A recessionary gap:
a. is of little consequence in a capitalist economy. b. represents actual physical output lost. c. implies an equilibrium level of output less than the full-employment level. d. is associated with rising labor prices. e. will automatically close, according to the Keynesian model.