In the above figure, suppose the value of the European euro is P1 and U.S. demand for French wine declines. The effect on the franc can be shown by
A) an increase in the value of the euro to P2.
B) the excess demand of euro equal to Q3 - Q1.
C) the decrease in the value of the euro to P0.
D) a shift in the demand for euros from D1 to D0, but no change in the value of the euro.
Ans: C) the decrease in the value of the euro to P0.
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The above figure shows the demand and marginal cost curves for a monopoly. Under monopoly, consumer surplus equals
A) a + b. B) a + b + c. C) a + b + c + d + e + f. D) None of the above.
Assume equilibrium real GDP per year is equal to full-employment real GDP. If aggregate demand falls, then
A. there will be an expansionary gap. B. there will be a recessionary gap. C. long-run aggregate supply will eventually decrease too. D. the price level will increase in the short run and decrease in the long run.
Under the collusion model, the outcome in an oligopoly is the same as a monopoly.
Answer the following statement true (T) or false (F)
A horizontal merger between two firms occurs when:
a. the products of the merging firms were not related in any manner before the merger. b. one firm is a producer of products, and the other firm is a producer of services. c. one firm is a domestic firm, and the other is a foreign company. d. the firms stood in a buyer-seller relationship before the merger. e. the merger partners were competitors.