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notka56 [123]
3 years ago
9

Bill and Fred bake cookies and pies. Bill's opportunity cost of baking 1 pie is 5 cookies. Fred's opportunity cost of baking 1 p

ie is 7 cookies. If both parties are to benefit from trade then we can expect 1 pie to sell for _____.
Business
1 answer:
Gennadij [26K]3 years ago
3 0

Answer:

6 Cookies {or any >5, <7)

Explanation:

Theory of Comparative Advantage states : A person/ economy having lesser opportunity cost (i.e other good sacrifised) to attain a good, should sell it to - other person/ economy having the good's higher opportunity cost.

Trade is beneficial if the terms of trade exchange ratio is better than own account production sacrifise ratio.

Bill can bake a pie with opportunity cost of 5 cookies. Fred can bake a pie with opportunity cost of 7 cookies. Bill has less opportunity cost of Pie in terms of Cookies, so should sell it to Fred.

The trade between them will be beneficial only if : both of them gain from trade - i.e get a good at lower opportunity cost than their own. Fred getting 1 pie per 6 cookies is better than his own sacrifise ratio i.e 1pie : 7 cookies.  Bill getting 1 cookie per 0.16 (1/6) pie is better than his own sacrifise ratio i.e 1cookie : 0.25pie (1/5)

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let it be known they did good or let them know they did wrong

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Suppose Rebecca needs a dog sitter so that she can travel to her sister's wedding. Rebecca values dog sitting for the weekend at
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Answer:

d. $10.

Explanation:

Tax is a payment made to the government to assist it in financing its various programs. Taxes are the main source of government revenue.  Income tax is the tax levied on individuals and firms on their earnings.

Susan and Rebecca enter into a work agreement where Rebecca hires Susan to dog sit for her. Susan will be working and is expected to pay taxes on the income received. Rebeca will be attending a wedding, which is not an income-generating activity; hence she will not pay any taxes. It means only Susan will pay taxes as she is the only one who will be earning. If the tax imposed on dog sitting is $10, then the two ladies will be worse-off by $10.

5 0
3 years ago
4. Suppose the supply of apples sharply increases because of perfect weather conditions throughout the growing season. Assuming
koban [17]

Answer:

Apples supply increase imply new equilibrium at lower price, higher quantity. Demand downwards expansion on the curve itself is due to lower price.

Explanation:

Market is at equilibrium where Market Demand = Market Supply, & downward sloping  demand curve intersects upward sloping demand curve.

If supply of apples increase & supply curve shifts rightwards, there is Excess Supply at previous equilibrium. Excess Supply creates competition among sellers, reduces new market price.

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7 0
2 years ago
When a firm is given monopoly power, it loses its freedom of contract, and a governmental body is given the power to determine t
Pani-rosa [81]

Answer:

The government agency is providing basic and/or essential services that further deepen the interests of members of the public

Explanation:

The assertion that a firm with a monopoly power loses it freedom of contract is very true. Monopolies by its realities come with features that ultimately cater for the interests of the firm, instead of the consumers. One of these is charging an astronomical high price on a particular item of commodity, and not taking cognizance of the purchasing power of the public. A firm could to this, and ultimately get away because its the only delivering such services - the one with the enormous monopoly power. Here, there is no stiff competition among goods that may offer liberty of choices to ordinary consumers.

To mitigate these numerous power of monopolies, governmental body has been giving the power to regulate and maintain an oversight functions. They now determine the provisions of contracts. The main objective of government agency, thus, is to ensure a firm with a monopoly power considers the basic and essential interests of the members of the public - the end users. Here, members of the public are insulated from unnecesary exploitation by the monopolies.

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2 years ago
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