Suppose a perfectly competitive firm is producing 1,000 units of output and the marginal cost of the 1,000th unit is $7. If the firm can sell each unit of output for $7 and the firm's revenue is sufficient to cover its variable cost, the firm should:
A. increase production to increase profits.
B. increase price to increase profits.
C. leave production unchanged.
D. decrease production to lower losses.
Answer: C
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Use the following graph, which shows the market for euros, to answer the next question.
Assume the U.S. and European governments adopt a system of flexible exchange rates. If more people in Europe decide to purchase U.S. cars, what effect will this have on the market for euros?
A. The supply of euros will decrease. B. The supply of euros will increase. C. The demand for euros will decrease. D. The demand for euros will increase.
Technology can be defined as the
A. ability to get more output from a given amount of inputs. B. act of putting new methods into effect. C. discovery of new ways of making products. D. result of savings.
Which of the following was specifically instituted to ensure a successful hard peg?
A) the Bretton Woods Agreement B) the European Monetary System C) the European Monetary Union D) the International Monetary Fund
Under which of the following scenarios is it most likely that monopoly power will be exhibited by firms?
A) When there are few firms in the market and the demand curve faced by each firm is relatively inelastic. B) When there are many firms in the market and the demand curve faced by each firm is relatively inelastic. C) When there are few firms in the market and the demand curve faced by each firm is relatively elastic. D) When there are many firms in the market and the demand curve faced by each firm is relatively elastic.