Author Question: Refer to Figure 2-9. If the two countries have the same amount of resources and the same ... (Read 16 times)

madam-professor · **on:** Jun 29, 2018

Refer to Figure 2-9. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of popsicles?

A) Greenland B) They have the same advantage.
C) Iceland D) cannot be determined

Question 2

Using Figure 9.1, explain what a firm would do in the short run if the market price of its product were at P3 and it produced Q3 . Is the firm earning an economic profit? Explain.

What will be an ideal response?

kmb352 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

The firm would continue to produce in the short run. The firm is enjoying a normal profit since the market price is equal to its average total cost. Normal profit is enjoyed when the firm is able to cover all its economic costs of production.