Answered: 1.There is an inverse relationship…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Kindly assist on the above two questions.

1.There is an inverse relationship between inflation and unemployment in the short run and this could be sewn as an .

a) example of the equility efficiency trade off.

b) an example of the impact of comparative advantage .

c) example of macroeconomic policy choice's.

d) example of an alternality .

e) an example of the use of abstraction in economic analysis.

2. A profit maximizing firm always .

a) sells its output at P=MC

b) produces at the output at which MR is maximized .

c) hires labor until the MRP of labor <0

d) finds the output where marginal profit is zero

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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