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The fallacy of composition entails someone’s deduction based on a whole concept or phenomenon that some segment is true from the whole truth. The competitive advantage attributed to any organization composes of items on which it can do better than other organizations in the same line of business. For an individual, a competitive advantage would be an individual expertise like being a computer specialist. When analyzing the balance of payments, it involves the evaluation of the accounting records consisting of monetary transactions between one country and other countries. In the event that receipts outweigh the payments or vice versa, it results in disequilibrium. Some of the major causes of this situation include fluctuation of exchange rates, fiscal policies, business competitiveness, and private practices (Henderson, 2008). Meanwhile, examples of inelastic goods or services include cigarettes and gasoline. In this case, the significant increase in their prices causes a minimal change in their demand. On the other hand, elastic goods include basic foods like cereal or rice. This is because a small change in their prices causes a significant change in the quantity demanded (Sloman & Sutcliffe, 2003).
An illustration of the law of diminishing marginal is a case whereby a person is hungry and there is plenty of food. This indicates that any decline in the process of consumption will lead to optimum satisfaction and decline in marginal utility. The explicit costs involved entails the payments made for the services or goods offered to a business. On the other hand, implicit costs refer to the opportunity costs or expenses, which a company forgoes leading to lack of expenditure by the business. Monopolies refer to existence of a single firm in an industry thus attaining the capability to influence its products’ market. Some of the barriers to entry in such a situation include government restrictions, high initial costs, access to valuable resource by firm and small markets (Sloman & Sutcliffe, 2003). Contrary to monopolies, oligopolies refer to a market dominated by a few large suppliers who influence the general performance of the industry.