- 3.1: Under what conditions is the production possibilitiesfrontier linea...
- 3.2: Explain how absolute advantage and comparativeadvantage differ
- 3.3: Give an example in which one person has anabsolute advantage in doi...
- 3.4: Is absolute advantage or comparative advantagemore important for tr...
- 3.5: If two parties trade based on comparativeadvantage and both gain, i...
- 3.6: Will a nation tend to export or import goods forwhich it has a comp...
- 3.7: Why do economists oppose policies that restricttrade among nations?
- 3.8: An average worker in Brazil can produce anounce of soybeans in 20 m...
- 3.9: Are the following statements true or false?Explain in each case.a. ...
- 3.10: The United States exports corn and aircraft to therest of the world...
- 3.11: Bill and Hillary produce food and clothing. Inan hour, Bill can pro...
Solutions for Chapter 3: Interdependence and the Gains from Trade
Full solutions for Principles of Macroeconomics | 6th Edition
average tax rate
total taxes paid divided by total income
a study that compares the costs and benefits to society of providing a public good
above-equilibrium wages paid by firms to increase worker productivity
the quantity of output that minimizes average total cost
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
the increase in output that arises from an additional unit of input
a group of buyers and sellers of a particular good or service
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
negative income tax
a tax system that collects revenue from high-income households and gives subsidies to lowincome households
claims that attempt to prescribe how the world should be
two goods with straight-line indifference curves
a person’s normal income
the amount of money today that would be needed, using prevailing interest rates, to produce a given future amount of money
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
the relationship between quantity of inputs used to make a good and the quantity of output of that good
a tax for which highincome taxpayers pay a larger fraction of their income than do low-income taxpayers
a situation in which quantity supplied is greater than quantity demanded
the costs that parties incur in the process of agreeing to and following through on a bargain
value of the marginal product
the marginal product of an input times the price of the output
willingness to pay
the maximum amount that a buyer will pay for a good