1. Absolute and comparative advantage: Explain how these concepts describe the benefits and costs of international trade.
2."Invisible hand": What is it and how does it affect the decision-making process in our economic system?
3.Circular flow diagram: Include the government sector in your explanation, a description of the roles that each participant plays in
the economy, and how the different sectors interact in the markets.
4.The Production Possibilities model: Provide an example and include a summary of what the model is illustrating and the economic implications for the economy.
5.Microeconomics and macroeconomics: Explain the differences between the two and why economics is divided into these two subdivisions.
6. 5-10 power point slides answering the corresponding to the questions listed in the above problem.
Please see attachment for complete solutions.
Absolute and comparative advantage:
An absolute advantage is the ability to produce a good or service using minimum resources than any other producers. The main benefit to the international trade from absolute advantage is that each country has an absolute advantage in some or other good or service. Absolute advantage has a benefit for international trade, citizen of every nation would improve their economic welfare by making themselves specialized in the production of good or service that the nation has an absolute advantage and then exporting that good and service to the other countries. And then they can import goods or services from those countries that had an absolute advantage in producing those goods (Hall & Lieberman, 2009).
Comparative advantage is the ability to produce a good or service at lower opportunity cost than other producers face. International trade would benefit from this as countries would be able to utilize their resources properly (Hall & Lieberman, 2009).
The cost of International trade of absolute and comparative advantage is that countries would have to rely on a single country for that particular good or service and at a time of bad economy in that country the international trade would get badly affected affecting the ...
Absolute and comparative advantages are determined. The expert explains how these concepts describe the benefits and costs of international trade.