Quick Revision Quiz

-Country A has Comparative Advantage in Good X. -Country B has Comparative Advantage in Good Y. (if each country has absolute advantage in exactly one good, it follows that the opportunity cost of producing that good must be lower than that of the other country)

Consumers: → Identical products: no choice between products → No dynamic efficiency → No innovative products The Economy: → No dynamic efficiency → poor LR (potential) economic growth Government: → No abnormal profit → Lower tax revenues Workers: → No abnormal profit → no fringe benefits

A tax where the average tax rate increases as income increases.

Private . . . Private

-Recession -Decreased demand for the product the worker produces

Higher prices of substitutes may decrease demand for a particular product, while lower prices may increase demand. Similarly, changes in the prices of complementary goods can affect the demand for related products.

Greater than 27C

Firms can increase production and their marginal cost doesn't increase (e.g. Spotify)

Production levels in the long run do not depend on price. They only depend on the quality and quantity of factors of production.