a.
To identify: The factor represented by the line on the graph.
a.
Explanation of Solution
Communism: It is a system wherein the property is owned by the community and individuals are paid as per their ability and need.
As stated in the picture, it is difficult to make profits after countries started competing. It can be clearly said that the downward sloping line on the graph in the given cartoon represents the profit earned over years.
b.
To identify: The reason for decreasing profits.
b.
Explanation of Solution
As stated in the picture, it is difficult to make profits after countries started competing. This is because communalism is a type of system wherein the government has control and countries don’t compete. This reduces the competition among the globally trading companies. Now, the countries have abandoned the communalism which means more companies will be trading globally and the competition increased for ABX Corporation. Increased competition clearly means that the firm has lower control over the price and global which further leads to lower profits.
c.
To identify: The type of economy countries have now moved to.
c.
Explanation of Solution
Capitalism: It is system wherein the factors of production are owned by the individuals.
Communalism is a type of system wherein the government has control and countries don’t compete. This reduces the competition among the globally trading companies. Now, more companies will be trading globally. This clearly means that the individuals have freedom and companies produce as per the free market forces. Thus, the countries have now moved towards capitalist economy.
Chapter 2 Solutions
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