Explain why the transactions costs involved with trying to acquire 100 acres of land from one landowner are probably going to be less than the transactions costs involved with trying to acquire 10 acres of land from each of 10 different landowners
What will be an ideal response?
Striking deals to purchase land can be time consuming and costly. When dealing with only one landowner, only one deal must be struck and involve attorney's fees, banking fees, and appraisal fees for just that one piece of land. When dealing with 10 different landowners, 10 separate deals must be struck, and each deal may involve separate fees for attorneys, banks, and appraisers.
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Suppose in Vietnam a worker can produce either 16 units of cloth or 2 bicycles while in China a worker can produce either 20 units of cloth or 5 bicycles
a. Which country has an absolute advantage in cloth production? In bicycle production? b. What is the opportunity cost of 1 unit of cloth in Vietnam? In China? c. What is the opportunity cost of 1 bicycle in Vietnam? In China? d. Which country has a comparative advantage in cloth production? In bicycle production? e. Suppose each country has 1,000 workers. Currently, each country devotes 40 percent of its labor force to cloth production and 60 percent to bicycle production. What is the output of cloth and bicycles for each country and what is the total output of cloth and bicycles between the two countries? f. Suppose each country specializes in the production of the good in which it has a comparative advantage. What is the total output of cloth and bicycles in the two countries? g. Provide a numerical example to show how Vietnam and China can both gain from trade. Assume that the terms of trade are established at 6 units of cloth for 1 bicycle.
Residential construction (new houses and apartments) are included in which component of GDP?
a. government purchases b. retail spending c. investment spending d. net exports