Producer surplus is
a. represented on a graph by the area below the demand curve and above the supply curve.
b. the amount a seller is paid minus the cost of production.
c. also referred to as excess supply.
d. All of the above are correct.
b
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Which of the following statements is true?
A) When two nations specialize and trade, there is a loss of efficiency and both the nations are made worse off. B) Trade between two nations is most beneficial when neither has a comparative advantage in the production of any goods and services. C) Trade between nations allows each nation to specialize in the production of goods in which it has comparative advantage. D) Trade between two nations is possible only when the opportunity costs of producing goods and services in both nations are identical.
Which of the following looks at the demand side of the market to explain some of the observed international trade patterns?
a. The theory of consumer preferences b. The factor abundance theory c. The product life cycle theory d. The Ricardian model e. The human skills approach