Examlex

Solved

In a World of Two Goods and Two People, Explain

question 21

Essay

In a world of two goods and two people, explain why there are gains from trade if:
a. one person can produce only one good and the other person can produce only the other good.
b. each person can produce both goods but can produce one of the goods only at a great cost.


Definitions:

Credence Properties

Characteristics of a product or service that are difficult or impossible for consumers to evaluate even after purchase and use, such as the expertise of a medical procedure.

Experience Properties

Characteristics of a product or service that can only be ascertained through direct use or experience.

Search Properties

Characteristics of a product or service that can be easily evaluated before purchase, such as color, style, or price.

Tangible Products

Physical items or goods that can be seen, touched, and owned, unlike services which are intangible.

Related Questions