The small-country monopolist's free-trade equilibrium occurs:
a. where MC = MR, where MR is declining and below price.
b. at the "world" price, which becomes a perfectly elastic demand curve for the monopoly firm and the firm's marginal cost curve.
c. where the home demand is completely satisfied by foreign importers.
d. at minimum marginal cost.
Ans: b. at the "world" price, which becomes a perfectly elastic demand curve for the monopoly firm and the firm's marginal cost curve.
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If planned aggregate expenditures are $300 billion, consumption is $180 billion, investment is $75 billion, government spending is $45 billion, there is a
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