At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?
This is a bad strategy. When few goods are imported, foreign countries will not have the currency necessary to buy a country's exports, and the volume of trade must therefore decline. For international trade to take place at all, a country must both import and export. There cannot be one without the other.
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Which of these is an example of economies of scale?
(A) A restaurant charges customers $1 a glass for water that was once provided for free. (B) A ranch increases its profits by expanding from 400 to 800 cattle without buying or renting additional land. (C) An Internet access company charges customers different rates for using the Internet at different times of day. (D) A shoe store finds it can increase profits by hiring high school students who are willing to work for minimum wage.
Economic profit provides an incentive for persons investing in human and physical capital to
a. undertake investment projects yielding an uncertain return. b. discover and develop beneficial (productive) investment opportunities. c. produce products that increase the value of resources. d. do all of the above.