Suppose a profit-maximizing firm in a perfectly competitive market is collecting $1,999 in total revenues. If the total cost of its fixed factors of production falls from $500 to $400, the firm will:
A. earn greater profits or smaller losses.
B. expand its output.
C. earn smaller profits or larger losses.
D. lower its price.
Answer: A
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A change in the relative price of one good versus another will cause a change in marginal product and the allocation of labor resources. When the price of good A increases relative to the price of good B and labor is mobile, the equilibrium real wage in industry A will:
a. rise in terms of good B. b. fall in terms of good B. c. remain the same. d. rise in terms of good A.
If demand and supply both shift to the right, then:
A) both price and quantity will go up. B) price will go down and quantity will go up. C) quantity will go down and price will go up. D) quantity will go up, but price could go up, down, or stay the same
Which of the following products is a leading import of the United States?
A. Grains B. Aircraft C. Petroleum D. Generating equipment
If the forward exchange rate of the yen in terms of dollars is greater than the spot exchange rate,
A) Japanese interest rates must be higher than U.S. interest rates. B) U.S. interest rates must be higher than Japanese interest rates. C) market participants must be expecting the dollar to appreciate against the yen. D) market participants must be expecting the dollar to depreciate against the yen.