When the real exchange rate decreases in the United States, then there is a(n) in U.S. demand for U.S. goods and a(n) in U.S. demand for Mexican goods.
a. decrease; increase
b. increase; decrease
c. increase; increase
d. decrease; decrease
Ans: a. decrease; increase
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Using n to represent price elasticity of demand, a simple monopolist will find that its marginal revenue at any point along its demand curve is equal to price at that point multiplied by
a. (1 - 1/|n|) b. 1/|n| c. |n| d. |n|*MC
An article in The Economist reported that prices of CDs in Britain were much higher than prices in the United States or other European countries. There were only a few major companies, and a report from a Parliament committee said there was no serious price competition. The best explanation for this is that
A. the industry was a contestable market. B. there were entry barriers in production and distribution of CDs. C. firms were avoiding profit opportunities. D. there was substantial differentiation of products.
The argument that jobs are lost to free trade is
A) correct because jobs are lost but foreign countries are helped and we can afford losses. B) totally false because no jobs are lost to free trade. C) somewhat correct because some jobs are lost but incorrect because new jobs also are created. D) true only when tariffs are imposed on the goods being imported. E) incorrect because no jobs are lost and new jobs are created by trade.
Suppose a firm earns an accounting profit. This means the firm also earns a positive economic profit
a. True b. False Indicate whether the statement is true or false