What is the difference between “absolute advantage” and “comparative advantage”? How can a less developed country like Mexico have a comparative advantage relative to the US?
Answer to relevant QuestionsWhat is the difference between rich and poor nations? How did they become rich or poor? What does the following statement mean? “Indeed, every decision we make involves some kind of trade-off.” Under what condition would the statement not be true?What is an “externality”? Why might it create a problem for market allocation?“Markets tend to favor the party that knows more.” True or false? So if you think you might know less, how does that change your behavior?In Chapter 1 it was noted that economics examines issues “at the margin.” Explain how this would apply to the decision to make or buy.
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