If the exchange rate between euros and dollars were 2 euros per dollar, when a French tourist buys a good valued at $80, its cost in euros would be:
a. 160 euros.
b. 80 euros
c. 78 euros.
d. 40 euros.
a
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In the case of a negative externality, in order to achieve efficiency the government must set the _________________ equal to the marginal ____________________.
A. tax; external costs B. tax; external benefits C. subsidy; external costs D. subsidy; external benefits E. tax; private costs
Which feature of the business cycle does the one-period model replicate with shocks to government expenditures?
A) procyclical employment B) procyclical consumption C) procyclical real wages D) countercyclical prices
When a firm increased its output by one unit, its AFC decreased. This is an indication that
A) the law of diminishing returns has taken effect. B) MC < AFC. C) AVC < AFC. D) the firm is spreading out its total fixed cost.
In a free market for depletable natural resources, any shortage where there is an excess of quantity demanded over quantity supplied must be
A. temporary. B. due to a price floor. C. the result of discovery of new deposits of the resources. D. due to a price ceiling.