For each good produced in a market economy, demand and supply determine Comparative advantage The price of the good sold in the market, but not the quantity bought and sold in the market The quantity of the good bought and sold in the market, but not the price Both price and quantity of the good bought and sold in the market Neither price nor quantity is determined by demand and supply because prices are ultimately set by producers

Answered: Comparative advantage The price…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For each good produced in a market economy, demand and supply determine

		Comparative advantage
		The price of the good sold in the market, but not the quantity bought and sold in the market
		The quantity of the good bought and sold in the market, but not the price
		Both price and quantity of the good bought and sold in the market
		Neither price nor quantity is determined by demand and supply because prices are ultimately set by producers

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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