48 44 40 Supply 36 32 28 24 20 16 12 Demand 5 10 16 20 26 30 36 40 45 50 55 60 QUANTITY Refer to Figure 8-3. Suppose a 20th unit of the good were sold by a seller to a buyer. Which of the following statements is correct? For the 20th unit, the difference between the buyer's value and the seller's cost is less than the tax per unit. For the 20th unit, the difference between the buyer's value and the seller's cost is greater than the tax per unit. unit. For the 20th unit, the difference between the buyer's value and the seller's cost is equal to the tax per It makes sense for the buyer to buy and for the seller to sell the 20th unit, with or without the tax in place. PRICE

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.