EBK ECON MICRO
6th Edition
ISBN: 9781337671828
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 3, Problem 13P
To determine
Reasons as to why international trade occurs and meaning of deficit in the merchandise trade balance
Concept Introduction:
International Trade: The exchange of capital, goods and services beyond the national boundaries of the country is termed as International Trade.
Merchandise Trade Balance: It is the difference between the total imports and exports of the goods of the country.
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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3
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5 units to Sadid's utility, while the last bread added 7 units.
Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's
consumption bundle? Why or why not? Give reasons in support of your answer.
State the condition for a consumer's utility maximizing choice and illustrate graphically.
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