Economic Concepts and Analysis

Question 1

Definition of Leakages

Answer 1

The amounts of individual income that are not spent on domestic consumption. Leakages consist of taxes, savings, and, indirectly, imports

Question 2

Which country is the world’s largest exporter of goods/services?

Answer 2

China is the world’s largest exporter of goods/services, followed by the United States (#2) and Germany (#3).

Question 3

What are generic strategy identified by Michael Porter?

Answer 3

Focus, cost leadership and differentiation

Question 4

Perfect Monopoly

Answer 4

In a perfect monopoly market structure, the marginal revenue curve is below the demand curve and the curves diverge as the quantity increases. The basic reason for the relationship is that, facing a downward-sloping demand curve, the firm must continuously lower its selling price in order to sell more units; therefore, marginal revenue must be below demand.