What is a surplus? What is a shortage?
What will be an ideal response?
A surplus is a situation in which the quantity supplied is greater than the quantity demanded. A shortage is a situation in which the quantity demanded is greater than the quantity supplied.
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In the short run, firms expand their production when the price level rises because
A) the money wage rate remains constant so the higher prices for their products makes it profitable for firms to expand production. B) each firm must keep its production up to the level of its rivals, and some firms will expand production as the price level increases. C) the higher prices allow the firm to hire more workers by offering higher wages, thereby increasing productivity and profits. D) firms can increase their profits by increasing their maintenance.
A single-price monopolist will produce at the point where
A) MR = 0. B) MR = P. C) MR = MC. D) P = MC.
The law of comparative advantage applies to exchange between
a. individuals. b. regions. c. nations. d. all of the above.
The purchasing power parity theory is not a good explanation of how nominal exchange rates are determined in the short run because:
A. there is no evidence that low inflation is associated with less rapid nominal exchange rate depreciation. B. most nominal exchange rates are fixed and foreign exchange markets do not bring the supply and demand for currencies into equilibrium. C. many goods and services are not traded internationally and not all internationally-traded goods are standardized. D. most goods and services are traded internationally and are standardized.