A falling average cost implies that
a. marginal cost is above average cost
b. marginal cost is below average cost
c. marginal cost is equal to average cost
d. none of the above
b
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The theory that nominal exchange rates are determined so that the law of one price holds is called:
A. the law of supply and demand. B. the equilibrium principle. C. purchasing power parity. D. the fixed-exchange-rate rule.
Suppose, with a given supply and demand curve, the market for guitars would clear at $500, but the current price of guitars is $700. Given the above information,
A) there is a shortage of guitars. B) there is a surplus of guitars. C) the market for guitars is fully coordinated. D) the quantity of guitars supplied equals the quantity demanded.
Consider a diagram in which the variable measured on the y-axis remains constant while the variable measured on the x-axis increases. The graph is of this relationship is a
A) perpendicular line. B) line with slope equal to zero. C) line that has positive slope. D) line that has a negative slope.
Efficiency is defined as
A) the maximum consumption of goods. B) the production of goods and services. C) production of output at minimum cost. D) arriving at one's destination quickly.