Discuss the concept of the globalization of production.
What will be an ideal response?
Answer: The globalization of production refers to the souring of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production. These factors of production include labor, energy, land, and capital. This helps companies lower their overall cost and improve the quality of their products. An example in the book includes Boeing's 777. Japanese, Singapore, Italy, and other foreign suppliers created 30% of the 777. They claim their outsourcing is good because their suppliers are the "best in the world at their particular activity."
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If you invest $500 today, and the value one year from today is $1000, then the annual interest rate must be
A) 10%. B) 50%. C) 100%. D) 200%.
If the return on capital is less than the cost of capital
A) economic profits are zero. B) accounting profits are zero. C) then accounting profits minus economic profit are zero. D) economic profits are negative.