Difference in environmental standards or other government regulations among nations ?
Correct answer: C. can affect production costs and thus alter comparative advantages and trade patterns
- A. have no impact on patterns of international trade
- B. have tended to make U.S steel companies more competitive internationally
- C. can affect production costs and thus alter comparative advantages and trade patterns
- D. have been eliminated by the nations participating in NAFTA
Explanation
Different environmental rules and regulations can change firms’ production costs. These cost differences alter comparative advantage and therefore the direction and composition of trade.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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