ECON 1 Lecture Notes - Lecture 9: Absolute Advantage, Deadweight Loss, Free Trade

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roseguinea-pig315

21 Mar 2018

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The world price and comparative advantage: word price: the price of a good that prevails in the world market for that good, if the world price is higher than the domestic price, domestic producers should export the product. Vise versa: comparing the world price and the domestic price before trade indicates whether a country has a comparative advantage, the domestic price reflects the opportunity cost, the lower the domestic price, the higher the comparative advantage. The winners and losers from trade: small countries with small economies are price takers in the global market. The gains and losses of an exporting country: when trade is allowed, the domestic price of an export rises to equal the world price, the domestic quantity supplied is greater than the domestic quantity demanded. The gains and losses of an importing country: the domestic price falls to the world price, the difference between the quantity supplied and demanded (shortage) is the quantity imported.

Related Questions

1. If we know that Canada exports maple syrup, we can conclude that maple syrup consumers in Canada are worse off than they would be in the absence of trade.

Is the statement true or false?

2. When a country opens up to trade in a good for which it has a comparative advantage, and the country begins to export the good, we can conclude that:

	a.	The domestic price will fall after trade opens up.
	b.	The total surplus for this good will increase as a result of opening up the market to international trade.
	c.	Opening the market to international trade will create a deadweight loss.
	d.	Both buyers and sellers in that country will be better off as a consequence of opening up the market to international trade.

cyanturtle416

Analysis of perfect world competition strategy and contribution of technology to trade

I. Analysis of the strategic competition of the perfect world enterprise

1. Perfect World Film and Television Product Competition Strategy

First of all, in the domestic market, the strategy of perfect world film and television is a diversification strategy. Focus on decentralized investments, including TV dramas, movies, and variety shows. His works satisfy the needs of the audience and are full of positive energy. Therefore, he won the Five One Project of the Central Propaganda Department and the Flying Award of the Chinese TV series, which made the perfect world gain a good reputation in the industry and benefit the long-term business. development of. At the same time, further expand to invest in the production of high-quality variety shows, such as "Extreme Challenge", "cross-border song king", "cross-border comedy king" and so on.

Perfect World Film and Television utilizes the Blue Ocean Strategy to invest in the small-cost film market, investing in "Steel's Piano", "Love for Love 33 Days", "Watching the Wind", "Let's Get Married", "Extraordinary Tasks", "Carnival" Other films, including "Love for Love 33 Days", became the biggest box office dark horse in the 2011 movie market with excellent box office results.

Secondly, in the international market, the perfect world film and television strategy is a pan-entertainment strategy layout, and further to the internationalization of film and television. Not only has it entered into a single investment and strategic cooperation agreement with Universal Pictures, a famous Hollywood company, but also introduced many foreign films to the Chinese market. The domestic market environment is fiercely competitive, and the perfect world film and television highlights. In the cooperation film list, there are many famous masterpieces: "Too Dark Time", "Phantom Shadow Sewing". In 2017, Perfect World Television entered the Jiaxing Media and led the new round of D-round financing, expansion, and established the perfect Weixiu Entertainment Group.

Summarize the competitive strategy of perfect world film and television. By leveraging the vigorous development of China's cultural industry, based on the cultural boutique strategy, using the influence of brand reputation, and improving the scale, intensification and specialization of the cultural industry, it is a global entertainment company with long-term influence.

II.The contribution of technology to trade

1. The relationship and contribution of technology and trade

First, according to the theory of comparative advantage, the difference in relative costs creates the basis for trade between the two countries. The emergence and development of technology have led to a gap in the production efficiency of products with a small cost gap, which has created a huge cost gap, which has prompted technologically advanced countries to export cheaper products to backward countries, and technology has promoted the expansion of trade scale.

Secondly, the development of international trade has led to the export of many technologies. According to the product life cycle theory, technology in developed countries will be iterated after the maturity period, and the original technology shows a trend of transition to developing countries to obtain more marginal profits. As a result, technology has flowed from the producing countries, and the producing countries have acquired new technologies, and developing countries have thus acquired technology that they cannot develop in their own countries for production. Overall, this has increased the welfare level of countries, reduced the cost of exports, and expanded the scale of trade between countries in the long run.

2.The promotion of technology in the perfect world of film and television

As mentioned above, Perfect World Film and Television has adopted a diversified strategy and reached strategic cooperation with Universal Studios of Hollywood. Both parties will benefit from this. For Universal Pictures, exporting its mature shooting technology to the perfect world, you can use the cheaper labour costs and fixed costs in China to get quality-assured films. For the perfect world, the mature technology of the world can be Helping them to complete the filming of the film better, and also gain a higher profit from the film export. Therefore, the export of film and television technology has promoted the film and television trade between China and the United States.

byzantiumox570

1. Other things remaining the same, a left shift in the supply curve will lead to:

A. a decrease in the equilibrium price and the equilibrium quantity.

B. an increase in the equilibrium price and the equilibrium quantity.

C. an increase in the equilibrium price and a decrease in the equilibrium quantity.

D. a decrease in the equilibrium price and an increase in the equilibrium quantity.

2. Two goods are said to be complements when a fall in the price of one good:

A. leads to a fall in the price of the other good.

B. leads to a left shift in the demand for the other good.

C. leads to a right shift in the demand for the other good.

D. doesn't affect the demand for the other good.

3. In a competitive free market:

A. all exchanges take place involuntarily.

B. there is no provision for the protection of property rights.

C. there is only one seller and many buyers.

D. the government does not impose price controls.

4. Which of the following correctly explains the role of economic agents in a free market?

A. Economic agents allocate goods to those buyers who value the goods the most.

B. Economic agents allocate goods to those buyers who need the goods the most.

C. Economic agents set production quotas for sellers in the market.

D. Economic agents set prices according to the production cost of each good.

5. Which of the following was an effect of the price ceiling placed on gasoline in the U.S. in the 1970s?

A. Gas stations ran out of gas as the quantity of gas demanded exceeded the quantity supplied.

B. Car owners started buying luxury cars that were less fuel-efficient as the price of gas was very low.

C. Those who valued gas the most were able to buy gas under the price ceiling.

D. The inventory of unsold gas increased and gas stations incurred losses.

6. Willingness to accept is:

A. the highest price that a producer is willing to receive to sell an extra unit of a good.

B. always higher than the marginal cost of production.

C. always lower than the marginal cost of production.

D. the lowest price that a producer is willing to receive to sell an extra unit of a good.

7. Assume that the economy is in a recession and consumers are expecting a fall in their income levels. This will cause a(n):

A. right shift in the market demand for all goods.

B. left shift in the market demand for all goods.

C. increase in the total quantity demanded of all goods.

D. decrease in the total quantity demanded of all goods.

8. Which of the following factors is expected to cause the demand curve for coffee to shift to the right?

A. A higher personal tax on the income of all consumers

B. An increase in the supply of coffee due to better weather

C. A higher tax on the sale of tea, a substitute for coffee

D. A fall in the manufacturing cost of coffee

9. If the demand and supply curves for a commodity shift to the right and the shift in demand is greater than the shift in supply, then in comparison to the initial equilibrium, the new equilibrium will be characterized by:

A. the same price and quantity.

B. a lower price and quantity.

C. a higher price and a lower quantity.

D. a higher price and quantity.

10. Which of the following statements correctly describes a perfectly competitive market?

A. Haggling and bargaining are commonly observed in a perfectly competitive market.

B. Buyers in a perfectly competitive market pay different prices according to their individual demand.

C. In a perfectly competitive market, individual sellers and buyers can influence the market price.

D.All participants in a perfectly competitive market are price-takers.

viridianhare505

ECON 1 Lecture Notes - Lecture 9: Absolute Advantage, Deadweight Loss, Free Trade

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