International Economics
16th Edition
ISBN: 9781305887633
Author: Robert Carbaugh
Publisher: Cengage Learning
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Question
Chapter 4, Problem 15SQ
a)
To determine
Identify Australia’s
b)
To determine
Determine the free trade equilibrium and graphically illustrate it.
(c)
To determine
Prove mathematically the statement.
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Which of the following graphs best represents the production possibility frontier of Country Y (Line Y), the production possibility frontier of Country Z (Line Z), and the production possibility frontier of this whole economy (Line W)? (Hint: Find W by adding the productive capabilities of Country Y and Z)
Group of answer choices
Which of the following factors tend to decrease the wage differential between union and non union workers:
unions tend to organize the firms with the lowest ability to pay initially
all of the above
unions must moderate their wage demand to keep workers competitive
some nonunion employers pay their employees above union wages
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The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry.
Price (dollars)
24
8
MC
ATC
MR
30
D
45 50
Quantity/time
The firm will maximize its profit at a quantity of
units.
After choosing the profit maximizing quantity, the firm will charge a price of
The firm will receive $
in revenue at the profit-maximizing quantity.
The total cost of production for this profit-maximizing quantity is S
The maximum profit the firm can earn in this situation is $
per unit for this output.
How will the situation change over time?
Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost.
◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero.
The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity.
This market is already in long-run equilibrium, and will not…
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