Use the following graph to answer the next question.
To maximize profits, the perfectly competitive firm should produce output at
A. A.
B. B.
C. C.
D. K.
Answer: C
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The equilibrium real interest rate is the rate ________
A) at which the output gap is zero B) at which the inflation rate is low C) controlled by the central bank D) all of the above E) none of the above
An increase in the dollar price of the Mexican peso (an appreciation of the peso) would cause
a. Mexico's imports to increase and exports to decline. b. Mexico's exports to increase and imports to decline. c. both Mexico's imports and exports to decline. d. both Mexico's imports and exports to rise.
For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs
a. True b. False Indicate whether the statement is true or false
The current account measures ________.
A. the value of goods and services traded between countries B. the payments for non-produced assets C. the flow of assets like bank deposits, stocks and bonds D. the value of income produced in the economy