If absolute PPP holds, then relative PPP will also hold
Indicate whether the statement is true or false
TRUE
Explanation: If the levels of the variables (prices and exchange rates) hold, then changes in these variables should hold as well. But, not vice-versa.
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At the XYZ Co, a unit of capital costs three times as much as a unit of labor. If MPK = 10, MPL = 5, then this firm
A) is minimizing its cost at current output level. B) should use more capital and less labor to raise output at current cost. C) should use less capital and more labor to raise output at current cost. D) None of above.
What describes the graphical relationship between average product and marginal product?
A) Average product cuts marginal product from above, at the maximum point of marginal product. B) Average product cuts marginal product from below, at the maximum point of marginal product. C) Marginal product cuts average product from above, at the maximum point of average product. D) Marginal product cuts average product from below, at the maximum point of average product. E) Average and marginal product do not intersect.
Government payment of a per-unit subsidy for medical care causes the out-of-pocket price that consumers pay for care to be
A) less than the price that producers receive for providing care. B) greater than the price that producers receive for providing care. C) greater than the market clearing price without the subsidy. D) equal to zero.
Suppose paper pulp mills are permitted to emit harmful pollutants, free of charge, into the air. How will the price and output of paper in a competitive market compare with their values under conditions of ideal economic efficiency?
a. The price will be too high, and the output will be too large. b. The price will be too low, and the output will be too large. c. The price will be too low, and the output will be too small. d. The price will be too high, and the output will be too small.