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In What Range Must The Price Of The Trade Lie?

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Chapter 3
Questions for review.
2. Explain how absolute advantage and comparative advantage differ.
Absolute Advantage is about the ability to produce a good using fewer inputs than another producer. And the comparative advantage is the ability to produce a good at a lower opportunity cost than another producer. The gains from specialization and trade are based not on absolute advantage but on comparative advantage.
5. If two parties trade based on comparative advantage and both gain, in what range must the price of the trade lie?
The range is between the two parties opportunity costs.
Problems and Applications
Maria can read 20 pages of economics in an hour. She can also read 50 pages of sociology in an hour. She spends 5 hours …show more content…

To get the computer chip you also need computers, the demand for it increases with a higher price.Computer chips will be sold at a cheaper price when the quantity for equilibrium will increase while the price will decrease. People will stop using the typewriters and will start buying more on the computer chips. 6. Using supply and demand diagrams, show the effect of the following events on the market for sweatshirts.
a.
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b.
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c.
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d.
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8. The market for pizza has the following demand and supply schedules.
a.
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The equilibrium price of the pizza is $6.00 and the equilibrium quantity of the pizza is 81.
b. Suppliers have to lower the price for the sales to increase.The quantity for supply is greater than the quantity of demand.
c. Suppliers can raise the prices and for demand for product is greater than the supply. 11. Suppose that the price of basketball tickets at your college is determined by market forces. Currently, the demand and supply schedules are as follows:
a.
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The supply curve is vertical because this has a fixed number of seats that can not be changed.
b. The equilibrium price is 8 dollars and the quantity of tickets is at 8,000.
c. The equilibrium price will be at 2 dollars and the new equilibrium quantity tickets is at

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