Consider a monopolistically competitive firm that is earning profits in the short run. Which of the following changes will this firm experience in the long run?
a. The demand for the good produced by the firm will increase
b. The number of competitors faced by the firm will decrease.
c. The market price of the good sold by the firm will decrease.
d. The marginal cost of production incurred by the firm will reduce to zero.
c
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A fixed exchange rate is an exchange rate whose value:
A. is set by official government policy. B. varies according to supply and demand for the currency in the foreign exchange market. C. reflects the comparative advantage of the home country versus other foreign countries. D. is established annually by the International Monetary Fund.
Relative PPP indicates that
A) the exchange rate between any two currencies is equal to the ratio of their price indexes. B) the same good sells for the same price internationally. C) the percentage change in the exchange rate is equal to the inflation differential between the domestic and foreign country. D) relative prices determine exchange rates.
The World Trade Organization (WTO)
a. members are required to eliminate tariffs and customs duties b. supervises trade in merchandise and in services c. supervises merchandise trade only d. members are required to eliminate ad valorem tariffs but not specific tariffs e. includes all nations with populations greater than 10 million, with the exception of North Korea and Cuba
Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's price level rise relative to England and nothing else changes, then the: a. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc
b. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc. c. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market rises, causing an uncertain change in the value of the Swiss franc. d. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc. e. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate.