Questions for Review without Answers
Chapter 15. Market Theory I. Functions of Markets.
Comparative Advantage
I. Basics
1) What are the most important features of capitalist markets?
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II. Why There Are Markets
2) What are the gains from trade?
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III. Why Trade Is Beneficial to Everybody
3) Distinguish absolute advantage and comparative advantage.
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4) The gist of comparative advantage is: Inputs remain constant, output and consumption rise. Explain how this happens.
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5) How do you compute a commodity's opportunity costs?
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6) Write down the formula to calculate the terms of trade.
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