Explain why a real exchange rate that does not equal one implies purchasing power parity does not hold.
What will be an ideal response?
Perhaps the best way to see this is with an equation. One equation for the real exchange rate is:
The real exchange rate = 
When this ratio equals one, purchasing power parity exists. If the ratio is not one, that reflects that you could not take the same number of dollars and purchase the same basket of goods in the foreign country.
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Briefly summarize the empirical literature on the long-run costs typically incurred by firms in a variety of industries. In particular, is there reason to believe that firms' long-run cost curves assume the typical U-shape? Why or why not?
What will be an ideal response?
What is a monopsony and how does a monopsonistic firm determine the wage rate to pay its employees?
What will be an ideal response?
Economists study how decisions are made.
Answer the following statement(s) true (T) or false (F)
An in-kind gift causes the budget line to:
A. rotate counterclockwise. B. shift to the left in a parallel fashion. C. shift to the right in a parallel fashion. D. None of the statements is correct.