Globalization

Globalization

Globalization and global trade have led to increased competition in world markets and increased efficient allocation of scarce resources.

Is it accurate to say that this is contributing to increased consumer surplus and reductions in inflationary pressures?

If yes, how (explain using economic concepts and terms how it is occurring)?

The graph above shows the demand and supply of socks for the country of Bangladesh.

a. If trade is avoided, Bangladesh consumes _____ pairs of socks at a price of _____ per socks.

b. With free trade, for a world price of $4 per pair of socks, Bangladesh is producing _____pairs of socks.

c. With free trade, for a world price of $4 per pair of socks, Bangladesh is consuming _______ pairs of socks.

d. With free trade, for a world price of $4 per pair of socks, Bangladesh is importing _________pairs of socks.

e. If the world price is $4 per sock, and the government of Bangladesh imposes a tariff of $1, Bangladesh produces ____________ and imports __________pairs of socks.

f. If the world price is $4 per pair of socks, and the government of Bangladesh imposes a tariff of $1, how much tariff revenue will the Bangladesh government collect? _____ .

QUESTIONS:

QUESTION 1
1. Economic profit involves explicit costs, while accounting profits involveimplicit costs.

True
False
4 points
QUESTION 2
1. In general, the product price is higher in an oligopolistic market than thatof monopolistic competition.

True
False
QUESTION 3
1. Since there is free mobility of resources, the perfect competitor can freelymove in and our of a given perfectly competitive market.

True
False

QUESTION 4
1. The short run is a period of time when all factor inputs are fixed.

True
False
1. True
False
QUESTION 6
1. A firm in a perfectly competitive industry may incur a short-term loss and yet continue producing in order to minimize losses.

True
False
QUESTION 7
1. A monopolistic competitor produces a differentiated product having numerous close substitutes.

True
False
QUESTION 8
1. The monopolist produces a product for which there are no close substitutegoods.

True
False
QUESTION 9
1. One of the objectives of the monopolist is to squeeze out smaller competitors from the market.

True
False
QUESTION 10
1. Average fixed costs diminish continuously as output increases.

True
False
QUESTION 11
1. The demand which a monopolist is faced with is also the market demandfor the product.

True
False
QUESTION 12
1. Economic profit involves total revenue minus the total costs, with total costmeasured as the opportunity costs of production.

True
False
QUESTION 13
1. To affect sales, a monopolistic competitor can lower price or differentiatethe product.

True
False
QUESTION 14
1. A monopolist is different from a perfect competitor by the monopolist’sprice being equal to average revenue.

True
False
QUESTION 15
1. The average total cost curve on a graph will be found below the averagevariable cost curve.

True
False
QUESTION 16
1. Economies of scale is when the cost of producing a unit increases as itsoutput rate increases.

True
False
QUESTION 17
1. The long-run average cost curve will be derived by adding up all the shortrun average total cost curves.

True
False
QUESTION 18
1. A firm may become a monopoly if it controls the entire supply of a basicinput required to manufacture a product, has exclusive rights to make a product or use a particular process, and/or is awarded a market franchiseby a government agency.

True
False
QUESTION 19
1. A perfectly competitive industry is characterized by a few producers, all producers produce a homogeneous product, and there is free mobilityof resources.

True
False

QUESTION 20
1. A perfect competitor can reap an economic profit in the short run but notin the long run.

True
False
QUESTION 21
1. Total fixed cost curve shows that fixed costs vis-à-vis production levelsdon’t change.

True
False
QUESTION 22
1. The four types of market structures we study in economics are perfectcompetition, monopolies, oligopolies, and corporations.

True
False
QUESTION 23
1. At least in theory, the more competition there is in the market, the greateralso is the efficiency in the economy.

True
False
QUESTION 24
1. A firm’s economic profit is usually higher than its accounting profit.

True
False

QUESTION 25
1. Marginal costs will start to fall before average costs start to fall.

True

False
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