Basic Economic Concepts

Country Y will export wheat.

Country X and Y will both export wheat.

Both country won't trade with wheat.

Country X will export wheat.

Offering tax credits for consumers who limit their use of polluting products.

Regulating emissions by setting maximum allowable pollution levels.

Privatizing air resources by allowing firms to own parts of the atmosphere.

Providing subsidies proportional to the amount of clean air produced by firms.

A decrease in production costs due to increased output.

Trading goods at an equal value without using money.

The exchange rates between different countries' currencies.

Sacrificing one good or service to purchase or produce another.

Constructing alternative routes subsidized by state-funded infrastructure grants.

Introducing annual passes with discounts according escalating road usage frequency.

Implementing peak-time congestion pricing where toll rates vary based on traffic volume.

Implementing congestion pricing where traffic volumes fluctuate greatly.

Surplus in trade balance is likely since consumers turning away from domestic products will force local producers to export more.

True Statement: It could cause depletion of foreign currency reserves as demand for imports surpasses export revenue, resulting in a negative balance of payments.

It may lead to no significant effect as the fixed exchange rate system automatically adjusts to balance trade flows.

Inflation could decrease as more foreign goods enter the economy, creating greater competition and lower prices.

Terms of trade problems.

Input problems

Specialization problems

Output problems

Shift to the left

Shift to the right

Movement along the curve upward

Movement along the curve downward

Firm facing elastic demand should expect larger fluctuations.

First firm with inelastic demand should expect smaller fluctuations.

No prediction can be made regarding fluctuations without additional information.

Both companies have similar expectations due to perfect competition market structure.

If the technology gap is too large, trade cannot occur because there needs to be a balance between nations' productive capabilities.

High-technology adoption rates ensure dominance, no matter what kinds advantages exist elsewhere, in trade relationships.

Even if one country is less technologically advanced, both can gain by specializing in products where they each have lower relative opportunity costs.

The less advanced nation won't benefit since superior technology always wins out international markets, diminishing mutual gains.

The rate at which one good can be exchanged for another.

The ability to specialize in the production of goods and services.

The ability to produce more of a good or service with a given amount of resources than someone else.

The ability to produce a good or service at a lower opportunity cost than competitors.