An economic model
a. uses equations to understand normative economic phenomena
b. often omits crucial elements
c. simplifies reality in order to focus on crucial elements
d. tries to make simple concepts more complex
e. cannot be proven wrong
C
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If the cost of a typical basket of goods in the U.S. is $100 and in China it is 500 yuan, and the nominal exchange rate is 10 yuan per dollar, what is the real exchange rate?
A. 1. B. 2. C. 3. D. 4.
The portion of the marginal cost curve above the minimum point on the average variable cost curve is part of the perfectly competitive firm's
a. average revenue curve b. effective demand curve c. average variable cost curve d. supply curve e. total revenue curve
Suppose manufacturing of paper results in substantial ground-water pollution. One possible policy that can be used to reduce the inefficiency caused by this externality is
A. to subsidize the production of paper by the domestic firms. B. to impose a tax on the production of paper. C. to provide tax benefits to the firms exporting paper. D. to raise tariff barriers on paper imports.
A firm will earn economic profits whenever:
A. Marginal revenue exceeds marginal costs B. Marginal revenue exceeds variable costs C. Average revenue exceeds average total costs D. Average revenue exceeds average variable costs