A firm is a price taker if it
A) always sells its output at the industry-determined price.
B) takes consumer demand into consideration in setting its price.
C) takes its production costs into consideration in setting its price.
D) uses a pricing strategy to gain market share.
A
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The production possibilities frontier bows outward because
A) opportunity costs are decreasing as the production of a good increases. B) opportunity costs are increasing as the production of a good increases. C) opportunity costs are fixed as the production of a good increases. D) resources are of uniform quality.
If P = domestic prices, P* = foreign prices, and e is the nominal exchange rate, which of the following is implied by purchasing-power parity?
a. P = e/P b. 1 = e/P c. e = P/P d. None of the above is correct.