Economic profits at the short-run break-even point are
A. positive.
B. equal to zero.
C. negative.
D. indeterminate since they also depend on the size of the fixed costs.
Answer: B
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Refer to Figure 11.2. Suppose that Ca = 40, MPC = 0.8, I = 10. The slope of the consumption function is
A) 0.1. B) 0.2. C) 0.8. D) 0.9.
The response of output following a natural disaster includes
A) an increase in output demand and an increase in output supply. B) an increase in output demand and a decrease in output supply. C) a decrease in output demand and an increase in output supply. D) a decrease in output demand and a decrease in output supply.
Aggregation is the process of combining different things into a single category
a. True b. False
Suppose a Dell computer that sells for $2,000 in the U.S. is exported to Canada, where it sells for 2,500 Canadian dollars. Further assume that 1.5 Canadian dollars trade for one U.S. dollar in the foreign exchange market. According to the purchasing power parity theory, which of the following will occur?
a. Computers could be purchased in Canada for 2,500 Canadian dollars, and sold in the U.S. for $2,000 . The $2,000 in revenue from each computer sold could then be exchanged for 3,000 Canadian dollars, yielding a profit of 500 Canadian dollars for each computer sold (minus any transaction costs). b. Computers could be purchased in the U.S. for $2,000 and sold in Canada for 2,500 Canadian dollars. The 2,500 Canadian dollars in revenue from each computer sold could then be exchanged for $3,000, yielding a profit of $500 for each computer sold (minus any transaction costs). c. Purchasing power parity is achieved, and there is no profit to be had from reselling the computers. d. The demand for computers would rise in both the countries and purchasing power parity would be achieved.