A monopolistically competitive firm maximizes profits when it
A. produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal revenue.
B. produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal cost.
C. produces the quantity at which marginal cost equals marginal revenue and uses the demand curve to determine the market price.
D. produces the quantity at which marginal cost equals the market price.
Answer: C
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Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that
A. Alpha should specialize in Y and Beta in X. B. the terms of trade will be 3X equals 1Y. C. Alpha should specialize in X and Beta in Y. D. there is no basis for mutually beneficial specialization and trade.
Suppose that the price of doughnuts decreases. Given that doughnut holes are a by-product of producing doughnuts, one would expect:
A. the supply of doughnuts to increase. B. the supply of doughnut holes to increase. C. the supply of doughnut holes to decrease. D. the supply of doughnuts to decrease.
In the Aggregate Demand - Aggregate Supply diagram in Figure 8.1, Box 2 should be filled with 
A. AD for Aggregate Demand. B. AS for Aggregate Supply. C. PI* for macroeconomic equilibrium Price Index. D. RGDP* for macroeconomic equilibrium Real Gross Domestic Product.
Refer to the information provided in Table 33.3 below to answer the question(s) that follow. Table 33.3
Refer to Table 33.3. Trade will flow in both directions between countries only if the price of the euro is between
A. $.44 and $1.00. B. $1.00 and $2.25. C. $.40 and $.50. D. $.60 and $.75.