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3 years ago

Explain the theory of absolute advantage

Business

1 answer:

galina1969 [7]3 years ago

6 0

Answer:

Explanation: Absolute advantage is when a producer can produce a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than other producers.

Absolute advantage can be the basis for large gains from trade between producers of different goods with different absolute advantages.

By specialization, division of labor, and trade, producers with different absolute advantages can always gain more than producing in isolation.

Absolute advantage is related to comparative advantage, which can open up even more widespread opportunities for the division of labor and gains from trade.

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The classical model assumes that wages and prices A. are flexible in the long run but not in the short run. B. are always comple

PtichkaEL [24]

Answer:B. are always completely flexible

Explanation:The classical theory proposes that all markets reequilibrate because of adjustments in prices and wages which are flexible. For instance, if an excess in the labor force or products exist, the wage or price of these will adjust to absorb the excess. If prices and wages are flexible, markets reequilibrate.

Wages are said to be flexible when they respond to changes in supply and demand and lead to the market clearing wage being set. It implies that the wage will be set by the Marginal Revenue Product of labour and marginal cost of labour. Any change in supply and demand for labour will lead to a change in the wage rate.

The importance of wage flexibility arises from the fact that, in most macroeconomic models, we find an inverse relationship between wages and employment.

3 0

3 years ago

In Regulating the Commons, Japanese village detectives had a strict set of punishments with money sanctions for those who broke

pychu [463]

Answer True???????????????????

3 0

3 years ago

Kathleen Taylor is a high school student who has been investigating the possibility of mowing lawns for a summer job. She has a

djverab [1.8K]

Answer:

Kathleen Taylor

a. The break-even lawns she needs to mow is:

= 31.25 lawns.

b. She can then expect to make $4,320 in Service Revenue and $2,304 in net income.

c. She should not lower her price.

Explanation:

a) Data and Calculations:

Cost of equipment = $500

Cost per lawn = $14

Price per lawn = $30

Contribution per lawn = $16 ($30 - $14)

Break-even point = $500/$16

= 31.25 lawns

Available period = 8 weeks

Number of lawns per day = 3

Working days per week = 6

Number of lawns per week = 18

Number of lawns for the period = 144 (18 * 8)

She can then expect to make $4,320 in Service Revenue and $2,304 in net income.

Number of lawns for the period = 192 (4 * 6 * 8)

Service revenue = $4,800 (192 * $25)

Net income = $2,112 (192 * $11)

4 0

3 years ago

Kier Company issued $700,000 in bonds on January 1, Year 1. The bonds were issued at face value and carried a 4-year term to mat

mezya [45]

Answer: Interest expense = $45500

Cash outflow = $45500

Explanation:

Based on the information that were given in the question, the amounts of interest expense and cash flows from operating activities, that will be reported in the financial statements for the year ending December 31, Year 1 will be calculated thus:

Interest expense = $700,000 × 6.50%

= $700,000 × 0.065

= $45500

The interest expense of $45500 will be reported on December 31, Year 1 in the income statement and will also be reported in the cash outflow as well. Therefore,

Interest expense = $45500

Cash outflow = $45500

5 0

3 years ago

The Royal Seattle Investment Club has $100,000 to invest in the equity market. Frasier advocates investing the funds in KSEA Ra

madam [21]

Answer:

Northwest Medical

Explanation:

In this question, we have to find out the risk to reward ratio for stocks

KSEA Radio = (Expected return - risk free rate) ÷ (Beta)

= (16.8% - 4%) ÷ (1.6)

= 8%

Northwest Medical = (Expected return - risk free rate) ÷ (Beta)

= (14.7% - 4%) ÷ (1.1)

= 9.72%

By comparing these two stocks, we get to know that the Northwest Medical gives high return then the KSEA Radio .

So, Northwest Medical should be selected

5 0

3 years ago