If China were to adopt a floating exchange-rate regime, it would:
A. cause the Chinese trade balance to fall.
B. cause the U.S. trade balance with China to fall.
C. force the U.S. to adopt a fixed exchange rate to maintain the balance of trade.
D. de-stabilize the entire world economy.
A. cause the Chinese trade balance to fall.
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Whether or not a separating equilibrium exists in a competitive market with adverse selection depends on what fraction of consumers is of the high cost type and what fraction is of the low cost type.
Answer the following statement true (T) or false (F)
Explain the equity-efficiency trade-off. Give an example of conflicting equity and efficiency outcomes of a policy
What will be an ideal response?
In the above figure, when 2000 bicycles are produced each month, we can see that
A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. B) more bicycles should be produced to reach the allocatively efficient level of output. C) the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. D) Both answers A and B are correct.
Refer to Figure 12-7. If the market price is P2 the firm
A) will make a profit and produce a quantity of Q2. B) will break even and produce a quantity of Q2. C) will make a profit and produce a quantity of Q1. D) will make a profit and produce a quantity of Q3.