Is it possible for a country to have a comparative advantage in everything?

June 30, 2024 No Comments

A: In international trade, it is not possible for a country to have a comparative advantage in the production of all goods. One country can, however, have an absolute advantage in producing all goods. In economics, the difference between a comparative advantage and an absolute

How much of the global beverage industry is controlled by Coca Cola and Pepsi?

June 30, 2024 No Comments

A: Approximately 60% of the global nonalcoholic beverages industry is controlled by Coca-Cola and Pepsi. Of this 60%, the split between Coca-Cola and Pepsi, respectively, is about 40% to 20%. This average is on a global and U.S. domestic basis. Both companies face competition from

Is Mexico an emerging market economy?

June 30, 2024 No Comments

A: Mexico meets all the criteria of an emerging market economy. The country’s gross domestic product, or GDP, per capita beats most of its peers in the developing world but falls short of the threshold required for classification as a developed country. The story with

How much revenue in the airline industry comes from business travelers compared to leisure travelers?

June 30, 2024 No Comments

A: Airlines receive about 60 percent of their revenue from consumers directly and the other 40 percent from selling frequent-flier miles to credit card companies, repairing aircraft and offering other services. Of consumer revenue, business travelers contribute more than leisure travelers. Business travelers account for

How must banks use the deposit multiplier when calculating their reserves?

June 30, 2024 No Comments

A: The maximum amount of checkable deposits a bank creates through loaning money cannot exceed the amount of the bank’s reserves multiplied by the deposit multiplier. The deposit multiplier is part of the money supply expansion activity by a bank made possible with fractional reserve

How reliable or accurate is marginal analysis?

June 30, 2024 No Comments

Marginal analysis is designed to show how economic reasoning allows actors to accomplish more by understanding limits on what can be accomplished. The focus of marginal analysis is on possible incremental adjustments in resource allocation. As the underlying technique in cost-benefit analysis, marginal analysis is

How strongly does government regulation impact the utilities sector?

June 30, 2024 No Comments

A: Government regulation dominates the utilities sector. The majority of all American consumers receive their utilities services from private companies that are regulated at the state level by public service commissions. Larger federal or state power utilities are run directly by the government, as are

How successful have “dove” Federal Reserve heads been in the past when it comes to managing the economy?

June 30, 2024 No Comments

A: Until the financial crisis of 2007-2008, it seemed as though dovish chairs of the Federal Reserve had used monetary policy to effectively keep down unemployment without noticeable negative consequences. The “Great Moderation” ushered in by Alan Greenspan was an enormous success story, until the

How to calculate the income effect distinctly from the price effect?

June 30, 2024 No Comments

A: Economists calculate the income effect separately from the price effect by keeping real income constant in the calculation. Normally, one formula is used to calculate the price effect using the income and substitution effects. There are two methods of separating the income and substitution

If left in place long term, what problems does protectionism cause for a country?

June 30, 2024 No Comments

A: In 1886, American free-trade advocate Henry George famously identified the problem of protectionism through an amusing analogy: “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” George poignantly identified

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