Factor-Price Equalization Theory Predicts That Post Trade the Input Prices

question 53

True/False

Factor-price equalization theory predicts that post trade the input prices within a country will equalize.

Understand the roles of households and businesses in the market system.

Comprehend how a market system manages business risks.

Grasp the concepts of risk management, including the purpose of insurance.

Differentiate between market and command economies in terms of risk management and economic performance.

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Definitions:

Financial Markets

Marketplaces where individuals and institutions can trade financial securities, commodities, and other fungible items of value at low transaction costs.

Marginal Investor

A marginal investor is a representative investor whose actions reflect the overall market sentiment and whose transactions can affect a security's price.

Common Share

Equity ownership in a company, providing voting rights and entitling the shareholder to a share of the company's success through dividends and/or capital appreciation.

Dual-Class Shares

Sometimes created by a firm to meet special needs and circumstances. Generally, when special classifications of stock are used, one type is designated “Class A,” another as “Class B,” and so on. For example, Class A might be entitled to receive dividends before dividends can be paid on Class B stock. Class B might have the exclusive right to vote.