The Gravity Model Offers a Logical Explanation for the Fact

question 6

Multiple Choice

The gravity model offers a logical explanation for the fact that

• A) trade between Asia and the U.S. has grown faster than NAFTA trade.
• B) trade in services has grown faster than trade in goods.
• C) trade in manufactures has grown faster than in agricultural products.
• D) Intra-European Union trade exceeds international trade by the European Union.
• E) the U.S. trades more with Western Europe than it does with Canada.

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Definitions:

Total Profit

The overall financial gain made by a business after subtracting all costs and expenses from the total revenue.

Marginal Profit

The additional profit earned by producing and selling one additional unit of a good or service.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, holding all other inputs constant.

Variable Input

An input whose quantity can be changed in the short term to adjust production levels, such as labor or raw materials.