3. Before the industrial revolution the cottage industry was an industry that was centered in self-sufficient rural households. After the industrial revolutions production moved to urban factories where production was more efficient and on a larger scale. Advances in technology such as the advent of the steam power brought about specialized factories that drastically improved the productivity of the workers. 4. If the cost of producing a good for a household is below the market price the household should enter the market. The household should also look at the opportunity cost of producing the good. What are the trade offs of producing the good? Could the time be used in a more wise manner? 5. The industrial revolution boosted the production of firms because the center of industries moved from rural households to large mechanized factories. It provided for a more efficient division of labor. 10. Negative externalities must be taken account to in the market price ideally. Governments can impose regulations that fore participants to abide by rules and to reduce/take into account the negative externalities (for example carbon permits). Setting a hard number to produce is not a good idea because the economy may demand more than is actually being produced causing a shortage and causing prices to rise. 13. The opportunity cost of producing various goods varies across different countries. This is the reason why international trade exists. A trade balance deficift simply means that the country imported more than it exported. Chapter 4
1. Mceachers explains on pg 72 that the law of demand is "the quantity of a good that consumers are willing and able to buy which varies inversely with price , other things constant." Quantity demanded and price are inversely related (all other things staying constant). For example I would buy less of something if the price went up. 2. Factors effect demand are prices of other goods, consumer tastes, the income of...
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