In the long run, a perfectly competitive firm will exit a market when
A) its total revenue is less than its total cost.
B) its marginal revenue curve is below the minimum of its average total cost curve.
C) the price is greater than the minimum of its average total cost curve.
D) Both answers A and B are correct.
D
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Under uncovered interest parity, if the domestic interest rate is greater than the foreign interest rate, then exchange rates are:
A) expected to rise. B) expected to stay constant. C) expected to fall. D) uncertain.
An investor owns bond #1 that has a rate of return of 10 percent, but a similar bond #2 has an 11 percent return and equal risk. By selling bond #1 and buying bond #2 to earn a higher return, the investor is engaging in:
A. Pooling B. Arbitrage C. Diversification D. Time preference