Essentials of Economics - LaunchPad
4th Edition
ISBN: 9781319121341
Author: KRUGMAN
Publisher: MAC HIGHER
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Question
Chapter P9, Problem 1.1BC
To determine
Reason for profitability for Li & Fung.
Expert Solution & Answer
Explanation of Solution
It was profitable for Li & Fung to go beyond its brokering exports as it has absolute advantage in sourcing inputs from various suppliers across many nations. The company was able to allocate its resources where it could find profitable. Sometimes goods were produced using sophisticated technology or sometimes it is done in less advanced countries where labor is available in cheap.
Economics Concept Introduction
Concept Introduction:
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Chapter P9 Solutions
Essentials of Economics - LaunchPad
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Similar questions
- Why might Belgium, France, Italy, and Sweden have a higher export to GDP ratio than the United States?arrow_forwardOccasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Explain why such a statement is economically impossible.arrow_forwardYou just overheard your friend say the following: Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade. How would you respond?arrow_forward
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