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2 years ago

How and why do economic actors analyze opportunity costs to determine which goods or services they should specialize in?

1 answer:

3 0

A model used to illustrate the trade-offs related to splitting resources between the production of two items is called the Production Possibilities Curve (PPC).

<h3>How do economic actors calculate costs to specialize products?</h3>

The PPC is a useful tool for demonstrating the ideas of scarcity, opportunity cost, efficiency, and economic development and contraction.

Exchange possibilities that lead to consumption opportunities outside of the PPC are the consequence of production specialization based on comparative advantage rather than an absolute advantage.

In contrast to what would have been achievable domestically, trade between two agents or countries enables the countries to enjoy a higher overall output and level of consumption.

<h3 />

PPCs can be used to decide who should specialize in a certain good as well as opportunity costs and comparative advantages.

A nation or individual will be able to consume at a point beyond its PPC through specialization and commerce, assuming the terms of trade are advantageous (for example, offering each agent a cheaper opportunity cost than could be accomplished without trade).

Check out the link below to learn more about opportunity costs;

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3 years ago

True or false. When starting out of a career, you should always work at least two jobs so that you can accumulate money for inve

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3 years ago

Bob consumes food and housing. Suppose his marginal utility from an additional unit of food is 20 and his marginal utility from

lozanna [386]

Answer:

Option (E) is correct.

Explanation:

For utility maximization,

Bob's consumption of Housing and food should be such that:

$\frac{Marginal\ utility\ of\ housing}{Price\ of\ housing}=\frac{Marginal\ utility\ of\ food}{Price\ of\ food}$

Here,

$\frac{Marginal\ utility\ of\ housing}{Price\ of\ housing}=\frac{100}{2}$

= 50

$\frac{Marginal\ utility\ of\ food}{Price\ of\ food}=\frac{20}{1}$

=20

Bob is not maximizing utility, as these two terms are not equal(50 > 20).

Since the marginal utility per rupee spent on housing is greater than that on food.

Hence, Bob can increase his utility just by consuming more of housing and less of food.

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3 years ago

On January 1, 2014, P Company purchased an 80% interest in S Company for $616,800, at which time S Company had retained earnings

Illusion [34]

Answer:

For the year ended December 31, 2014, we have:

Controlling interest in consolidated net income = $76,560

Noncontrolling interest in consolidated net income = $19,140

Explanation:

This can be calculated as follows:

Net income of S Company = $95,700

Controlling interest percentage = P Company percentage interest in S Company = 80%

Noncontrolling interest percentage = 100% - Controlling interest percentage = 100% - 80% = 20%

Therefore, we have:

Controlling interest in consolidated net income of S Company = Controlling interest percentage * Net income of S Company = 80% * $95,700 = $76,560

Noncontrolling interest in consolidated net income of S Company = Noncontrolling interest percentage * Net income of S Company = 20% * $95,700 = $19,140

Therefore, for the year ended December 31, 2014, we have:

Controlling interest in consolidated net income = $76,560

Noncontrolling interest in consolidated net income = $19,140

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3 years ago

If private investors become less optimistic about the economy, we can expect that demand for loanable funds will increase. suppl

VARVARA [1.3K]

Answer:

demand for loanable funds will decrease

Explanation:

Loanable funds is the total of all funds that people have saved and deposited in the savings account of commercial banks. This saved funds are in turn lended out to borrowers so as to gain returns (interest) on it.

When a private investor becomes less optimistic, they would not want to invest their money in loan able funds, therefore the demand for loan able funds will decrease which leads to reduction in the real interest rate.

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3 years ago