The production possibilities curve shows the trade-offs between producing items by indicating the opportunity cost of increasing one item's production in lieu of another item. Equilibrium is the point at which the economy is most efficiently allocating its resources.
Consumer surplus is the difference between the number of products and the amount of consumers willing to buy it. Trade increases consumer surplus. The gain is the difference between the price they are willing to pay and the actual price.
Producer surplus is the difference between what a supplier is paid for a good or service and what it costs to supply the good or service. A producer surplus exists when actual price exceeds the minimum price sellers will accept.
The deadweight economic loss from an economically inefficient situation equals the consumer and producer surplus that people could gain by eliminating that inefficiency. Consumer and producer...
Consider a company that has a complex product comprised of many different inputs. The company has the option to outsource the production of some of these inputs and, according to the concept of comparative advantage, should do so if another company can produce these items more efficiently and cost effectively.
What were the Concept Summary results for the assessment?
All countries gain from international trade through comparative advantage. A country benefits by specializing in those goods it produces most efficiently and by exporting it to other countries. A country also benefits by importing those goods for which is does not have a comparative advantage. Producers have larger markets and consumers get better choices.
