The profit maximizing or loss minimizing quantity of output for any firm to produce exists at that output level in which:
A. total revenue is maximized.
B. total cost is minimized.
C. marginal cost is minimized.
D. marginal revenue equals marginal cost.
Answer: D
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Equilibrium in a market is
A. a situation in which there are no inherent forces that produce change. B. the natural state of affairs in the market. C. the actual price and quantity that will exist in a market. D. the best price and quantity that can exist in a market. E. All of these responses are correct.
Purchasing power parity exists when domestic currency:
a. maintains a fixed exchange rate with foreign currency. b. is not convertible into foreign currency. c. buys more goods at home than abroad. d. buys as many goods at home as it does abroad. e. appreciates in value against foreign currency.
Credit risk is:
a. The chance of a change in the market value of a security due to changes in macroeconomic variables, such as interest rates or exchange rates. b. The risk that credit cannot be expanded by the banking system due to central bank regulations. c. The chance that you will not be able to get a credit card when you really need it. d. The chance that borrowers will be unable or unwilling to repay their debts. e. The chance that a company will not be able to get a loan (i.e., credit) when it needs funding.
Suppose the U.S. government institutes a "Buy American" campaign, in order to encourage spending on domestic goods. What effect will this have on the U.S. trade balance?