Assume that price is greater than average variable cost. If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximize profits the firm should
A) continue producing at the current output.
B) produce a larger level of output.
C) produce a smaller level of output.
D) There is not enough information given to answer the question.
Answer: C
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Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country H is relatively labor abundant, then once trade begins
A) wages should rise and rents should fall in H. B) wages and rents should rise in H. C) wages and rents should fall in H. D) wages should fall and rents should rise in H. E) rent will be unchanged but wages will rise in H.
If an asset has a future value of $120, a present value of $30, and an interest rate of 4%, how many periods of compounding are there?
A) 45 periods B) 35 periods C) 28 periods D) 100 periods
Figure 3.3 illustrates the supply and demand for t-shirts. If the actual price of t-shirts is $10, we would expect that:
A. demand will decrease until quantity demanded equals quantity supplied. B. supply will increase until quantity demanded equals quantity supplied. C. price will increase until quantity demanded equals quantity supplied. D. there will be no change in the price since the market is in equilibrium.
Suppose there is an increase in income. This increase in income would have a direct effect on which of the following?
A) financial wealth B) housing wealth C) human wealth D) all of the above