Question 1

Why might private actors fail to undertake critical transfer cost-reducing investments despite the wide-ranging benefits that might emerge from transfer cost reductions?

Accepted Answer

The answer of Why might private actors fail to undertake...

Question 2

Which type of industry renders a firm more productive when located near each other than when separated from each other geographically?

Accepted Answer

Agglomeration economies refer to the benefits that firms gain by being located near each other in the same industry or related industries. These benefits include access to specialized labor, common inputs, knowledge spillovers, and reduced transportation costs. Therefore, firms located in close proximity to similar or related firms tend to be more productive than those located farther away.

Question 3

The logic of ____________ indicates that new opportunities for exchange between people with diverse production capabilities increase productivity and expand consumption opportunities by allowing people to specialize in the types of production they do relatively well.

Accepted Answer

The given logic is referring to the theory of comparative advantage, which suggests that countries or individuals should specialize in producing goods or services where they have a lower opportunity cost and trade with others who have a comparative advantage in producing other goods or services. This leads to increased productivity and consumption opportunities for all parties involved. It is different from absolute advantage, which refers to the ability of a country or individual to produce a good or service more efficiently than another country or individual, and may not always lead to beneficial trade. Proportionate advantage and relative advantage are not widely recognized economic theories.

Question 4

If local food supply is highly _________,food distributions encourage significant _______ in local food production.

Accepted Answer

The answer of If local food supply is highly _________,food...

Question 5

Governments and humanitarian aid organizations have a long history of distributing free food to needy people.Why are some humanitarian organizations increasingly experimenting,with distributing cash rather than food?

Accepted Answer

The answer of Governments and humanitarian aid organizations have a...

Question 6

If production is characterized by __________,then expansion of trade that allows individual producers to serve consumers spread out over larger areas may also increase productivity.

Accepted Answer

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. Expansion of trade allows producers to serve a larger market, which can lead to increased production and thus greater economies of scale, enhancing productivity.

Question 7

A person has a comparative advantage in producing a good if that person:

Accepted Answer

A person has a comparative advantage in producing a good if they can produce it at a lower opportunity cost than anyone else can. This means that person can produce more of the good or service for a given amount of resources and foregone production of another good or service. Higher productivity (A) and more human capital (D) may contribute to a person's ability to produce a good more efficiently, but do not necessarily imply a comparative advantage. Having less desire to consume a good (C) is irrelevant to a person's ability to produce it.

Question 8

It is sometimes thought that the mere existence of marketing margins implies exploitation of small farmers and businessmen,who are cheated out of receiving the full retail price for their produce by middlemen.Can there be a benefit from marketing margins?

Accepted Answer

The answer of It is sometimes thought that the mere...

Quiz 8: Domestic Markets for Goods and Services