Figure 34-8
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Figure 34-8 has four sets of production possibility curves for two hypothetical countries. In which case will there be no advantage to trade between the two countries?
A. 1
B. 2
C. 3
D. 4
Answer: A
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If the AD curve shifts rightward while the AS curve and potential GDP don't change, then
A) there will be no change in real GDP, so the economy is at the trough of the cycle. B) the expansion phase of the business cycle occurs. C) there will be no change in real GDP, so the economy is at the peak of the cycle. D) the economy will move from a peak into recession. E) real GDP does not change.
To maximize net revenue, a price searcher should
A) set total revenue equal to total cost. B) set marginal revenue equal to marginal cost. C) set net revenue equal to zero. D) reduce output if marginal costs are increasing.
To find its profit-maximizing output level, a firm should operate where
A. AVC = MC. B. MC = MR. C. TFC = TVC. D. AFC = AVC.
Exhibit 7-6 A firm's cost and MC curves
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In Exhibit 7-6, if this firm is currently producing 20 units of output, this firm is
A. earning a profit of $10. B. earning a profit of $.50. C. losing $10. D. losing $0.50.