According to the No Marginal Improvement Principle, if X* is the best choice then at X* it must always be true that:
A. either MB = MC or the activity X is not finely divisible.
B. either MB ? MC or the activity X is not finely divisible.
C. either MB < MC or MB > MC.
D. MB = MC.
A. either MB = MC or the activity X is not finely divisible.
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Which of the following would cause a firm's cost curves to shift upward?
a. a reduction in resource prices b. a decrease in taxes c. an improvement in technology d. an increase in government regulations
A reduction in the required reserve ratio has the instant effect of:
a. Increasing excess reserves. b. Increasing bank shareholders' equity. c. Decreasing bank shareholders' equity. d. None of the above is correct. e. Increasing the monetary base.
Consider a Cournot duopoly with the following inverse demand function: P = 50 ? 0.2Q1 ? 0.2Q2. The firms' marginal costs are identical and are given by MCi(Qi) = 2. Based on this information, firm 1 and 2's reaction functions are:
A. r1(Q2) = 120 ? 0.5Q2 and r1(Q2) = 120 ? 0.5Q1. B. Q1 = 240 ? 0.5Q2 and Q2 = 240 ? 0.5Q1. C. r1(Q2) = 120 ? 0.5Q1 and r2(Q1) = 120 ? 0.5Q2. D. Q1 = 240 ? 0.75Q2 and Q2 = 240 ? 0.75Q1.
When we no longer assume that the exchange rate expected to occur in one year is constant, explain what variables affect the current exchange rate in a flexible exchange rate regime. Include in your answer an explanation of how changes in these variables affect the current exchange rate
What will be an ideal response?