How will the exchange rate (foreign currency per dollar) respond to an increase in the relative rate of productivity growth in Canada in the long run?
A) Exchange rates will rise.
B) Exchange rates will fall.
C) Exchange rates will be unaffected by changes in the relative rate of productivity growth in Canada, both in the short run and in the long run.
D) The exchange rate will be affected in the short run, but not in the long run.
Ans: A) Exchange rates will rise.
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If quantity of milk is measured on the horizontal axis and quantity of juice is measured on the vertical axis, a decrease in the price of milk will cause the budget constraint to:
A) pivot rightward along the vertical axis. B) pivot rightward along the horizontal axis. C) shift to the left. D) shift to the right.
If the market price is $4 and a perfectly competitive firm is producing 500 units and the marginal cost to produce the 500th unit is $4, which of the following is true?
A) The firm is maximizing profit. B) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is negative. C) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is positive. D) The firm should increase production to maximize profit.
If water quality law prevents the achievement of the efficiency criterion
a. that law must be repealed b. a “second-best” economic solution is to identify cost-effective policy initiatives c. cost-effectiveness is also prevented d. polluting sources should abate up to the point where total social benefits are maximized
Exhibit 15-1 Production possibilities curves
In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If both countries specialize in one good and trade for the other, :
A. Nabia and Pada will be able to consume at a point to the right of their respective production possibilities curves. B. Nabia will be able to consume, at the most, the combination represented by point A. C. Pada will be able to consume, at the most, the combination represented by point B. D. the citizens of Nabia will consume only corn and the citizens of Pada will consume only wheat.