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Solutions for Chapter Module 4: Comparative Advantage and Trade

Full solutions for Krugman's Economics for AP* | 2nd Edition

ISBN: 9781429218276

Solutions for Chapter Module 4: Comparative Advantage and Trade

Since 5 problems in chapter Module 4: Comparative Advantage and Trade have been answered, more than 11917 students have viewed full step-by-step solutions from this chapter. This expansive textbook survival guide covers the following chapters and their solutions. This textbook survival guide was created for the textbook: Krugman's Economics for AP*, edition: 2. Chapter Module 4: Comparative Advantage and Trade includes 5 full step-by-step solutions. Krugman's Economics for AP* was written by and is associated to the ISBN: 9781429218276.

Key Business Terms and definitions covered in this textbook
  • adverse selection

    the tendency for the mix of unobserved attributes to become undesirable from the standpoint of an uninformed party

  • budget deficit

    an excess of government spending over government receipts

  • business cycle

    fluctuations in economic activity, such as employment and production

  • comparative advantage

    the ability to produce a good at a lower opportunity cost than another producer

  • depreciation

    a decrease in the value of a currency as measured by the amount of foreign currency it can buy

  • equilibrium quantity

    the quantity supplied and the quantity demanded at the equilibrium price

  • fiat money

    money without intrinsic value that is used as money because of government decree

  • Fisher effect

    the one-for-one adjustment of the nominal interest rate to the inflation rate

  • game theory

    the study of how people behave in strategic situations

  • gross domestic product (GDP)

    the market value of all final goods and services produced within a country in a given period of time

  • income elasticity of demand

    a measure of how much the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded divided by the percentage change in income

  • marginal change

    a small incremental adjustment to a plan of action

  • monopoly

    a firm that is the sole seller of a product without close substitutes

  • natural monopoly

    a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

  • nominal GDP

    the production of goods and services valued at current prices

  • price elasticity of supply

    a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price

  • rational expectations

    the theory that people optimally use all the information they have, including information about government policies, when forecasting the future

  • social insurance

    government policy aimed at protecting people against the risk of adverse events

  • unemployment rate

    the percentage of the labor force that is unemployed

  • value of the marginal product

    the marginal product of an input times the price of the output

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