Developed nations tend to have LIMITED LABOUR SUPPLIES BUT LOTS OF CAPITAL. There are two major types of labour; skilled and unskilled labour. Developed nations of the world generally have low supply of labour which are needed to carry out the required activities in the economy, but they usually have huge capital, that is why people from less developed nations migrate into these countries.
Answer:
Prices drop when other perfectly competitive firms see an opportunity to earn profits and enter the market.
Explanation:
In a perfectly competitive market, firms can freely enter and exit the market in the long run.
Short run is too short for firms to enter or exit. So when the existing firms enjoy profits in the short run, this attracts the potential firms to enter the market in the long run.
As new firms join the market, market supply increases. This causes the market supply curve to shift to the right. The price level falls.
This causes the market share and profits of firms to decline.
Answer:
The correct answer is:
5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years. (a)
Explanation:
to calculate the percentage deflation, we will simply calculate the percentage change in price between the years stated. This is calculated as follows:
% change = 
Note that the negative sign shows a deflation.
if you use the same method for years two and three, you should get -3%, using P₁ as 142.5 and p₂ as 138.2. Hence option 'a' is correct.
