Compared to the 1980s, the Price of Computer Chips Is

question 38

Multiple Choice

Compared to the 1980s, the price of computer chips is much lower today but revenues from computer chips are ________ because demand is elastic.

• A) higher
• B) lower
• C) approximately unchanged
• D) about $14 trillion higher

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Definitions:

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity, facilitating beneficial trade.

Autarky

An economic system where a region or country is self-sufficient and has no trade with the outside world.

Specialization

The situation in which each person specializes in the task that he or she is good at performing.

Absolute Advantage

The ability of an individual or economy to produce a good or service more efficiently than competitors using the same amount of resources.