A firm's short-run supply curve is the firm's:
A. marginal revenue curve.
B. marginal cost curve above the minimum point of the average total cost curve.
C. marginal cost curve above the minimum point of the average variable cost curve.
D. average cost curve, below the minimum point of the marginal cost curve.
Answer: C
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The rational expectations hypothesis indicates that a monetary policy designed to alter real Gross Domestic Product (GDP) will fail unless
A) changes in the money supply are completely anticipated. B) labor unions have long-term contracts. C) the government's budget is not in deficit. D) changes in the money supply are unexpected.
In the figure above, Gap's economic ________ is ________
A) loss; $8,000 B) loss; $13,000 C) profit; $7,200 D) profit; $13,000
If the firm is able to reduce MC from MC0 to MC1 the firm will produce at point ________ on the new demand curve and lower price to ________
A) E1; P1 B) E0; P0 C) E2; P2 D) E0 or E1; P0
What is the drawback for a country that chooses to fix its exchange rate?
a. Fixing the exchange rate can deteriorate the international competitiveness because the real exchange rate can't fluctuate anymore. b. Businesses in the country are more exposed to business risks associated with exchange rate changes. c. The central bank loses its ability to influence the money supply, unless severe capital controls are imposed. d. Fixing the exchange rate has no disadvantages and should be adopted by all countries.