If the country can produce a good or service at a lower opportunity cost, it has a comparative advantage.
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What is comparative advantage?</h3>
- In an economic model, agents have a comparative advantage over others if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to the trade.
- Comparative advantage describes the economic reality of trade advantages for people, firms, or nations as a result of disparities in their factor endowments or technological progress.
- (The absolute advantage, comparing output per time (labor efficiency) or per quantity of raw material (monetary efficiency), is typically considered more intuitive but less accurate – productive trade is possible as long as the opportunity costs of manufacturing commodities vary between countries.)
Therefore, if the country can produce a good or service at a lower opportunity cost, it has a comparative advantage.
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Answer:
False
Explanation:
It does not necessarily means that when a firm gets a normal rate of return, it earns economic profit also, as it depends on various factors:
- In the short run every firm aims to recover its variable cost, and in it's long term duration to recover its total cost, but it does not necessarily conclude that the return will attain the level of earning economic profit.
- Normal rate of return is based on competitive market, as an average rate of return on market, but if the investment is made from borrowed funds, it might be that the company is not able to pay the cost of borrowing in that case it is even after attaining the normal rate of return it will not earn economic profit.
Answer:
The lump sum invested was $2,730.30.
Explanation:
Giving the following information:
Invested one lump sum 17 years ago at 4.25 percent interest. Today, the proceeds totaled $5,539.92.
We need to calculate the original amount that this person invested 17 years ago. We will use the following formula:
PV= FV/(1+i)^n
PV= 5,539.92/ (1.0425)^17
PV= $2,730.30
International trade has been significant for the globalization of free trade relations.
Explanation:
International trade has been responsible for the global economic growth in the 20th and 21st century .
International trade is responsible for the specialization of goods for one country which is at the most advantage for making that particular product while being able to import the others they may need
International trade makes it so that the types of goods and services available around the world can reach any other part of the world.
