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

July 8, 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

What are Common Examples of Monopolistic Markets?

July 8, 2024 No Comments

A: A monopoly, as a theoretical economic construct, prevails when barriers to entry exist because one firm can operate at a lower marginal cost than its competitors. The barriers can be legal or regulatory, economic, or geographic. Absent competitors, the monopoly firm can raise prices, restrict output and hurt consumers. Typical monopoly

Is Mexico an emerging market economy?

July 8, 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

What are common reasons for governments to implement tariffs?

July 8, 2024 No Comments

A: A tariff is a tax imposed by a governing authority on goods or services entering or leaving the country and is typically focused on a specified industry or product. It is meant to alter the balance of trade between the tariff-imposing country and its

Is Pareto Efficiency the same thing as perfect competition?

July 8, 2024 No Comments

A: Perfect competition and Pareto efficiency are separate theoretical economic constructs. Specifically, perfect competition provides the framework for a Pareto-optimal event to arise. A market achieves Pareto efficiency when it becomes impossible to improve one party without making one party worse off. Hypothetically, if resources

Is the consumer price index (CPI) the best measure of inflation?

July 8, 2024 No Comments

A: The consumer price index (CPI) measures food; beverages; housing; apparel; transportation; medical care; recreation; education and communication; and other goods and services. It is one of the most-used economic indicators to measure inflation in the United States, as it calculates the change in cost

Is the retail sector also affected by seasonal factors?

July 8, 2024 No Comments

A: Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the fourth quarter, or October through December, and peak at Christmas. According to the Census Bureau’s Monthly Retail Trade Report, the most seasonal retail markets are

How reliable or accurate is marginal analysis?

July 8, 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?

July 8, 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?

July 8, 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

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