Suppose a U.S. firm purchases some English china. The china costs 1,000 British pounds. At the exchange rate of $1. 45 = 1 pound, the dollar price of the china is
A. $1,450.
B. $250.
C. $690.
D. $2,000.
Answer: A
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Draw a graph using production indifference curves and budget lines showing a firm initially minimizing cost with its inputs of A and B. Then illustrate a new optimal combination of inputs when the prices of the inputs change.
What will be an ideal response?
What will most likely happen to the standard of living in a country that achieves sustained economic growth through increased productivity?
a. It will initially decrease and then increase. b. It will decrease. c. It will remain unchanged. d. It will increase.
A binding price ceiling is presented graphically as a(n):
a. price at equilibrium. b. price below equilibrium. c. price above equilibrium. d. inefficiently low quality of the good provided.
Money illusion:
a) is the misconception that prices have changed; it occurs when the Federal Reserve reduces the money supply. b) occurs when output rises. c) occurs only in the long run. d) is the misconception that one is wealthier; it occurs when the money supply grows.