Abstraction ignores many details in order to focus on the most important elements of a problem.

Suppose a monopolist is producing a level of output such that MR > MC. What should the firm do to maximize its profits?

A) The firm should do nothing — it wants to maximize the difference between MR and MC in order to maximize its profits. B) The firm should hire less labor. C) The firm should increase price. D) The firm should increase output.

When there is a current account deficit, it is likely that

A) exports exceed imports for the country. B) the country is an exporter of capital. C) the capital account has a surplus. D) the country has a budget surplus.