According to the excess capacity theorem, if every firm under monopolistic competition expanded its output,
A. cost per unit of output would rise.
B. social benefits would increase.
C. cost per unit of output would decrease.
D. MC and AC would remain unchanged.
Answer: C
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Suppose $1=10.5 pesos in new York and $1=9.6 pesos in mexico city. If you had $10,000 using arbitrage, your profits would be
A) $(10,000*10.5/9.6)-$10,000= $937.50 B) $[10,000*(10.5 -9.6)] = $9000 C) [10,000*(10.5 -9.6)] pesos = 9000 pesos D) $(10,000*9.6/10.5) = $9,142.8613.
An individual's demand curve for a good is derived by
a. varying the income level and observing the resulting total utility derived from both goods. b. varying the price of one good and observing the resulting quantities of the other good. c. shifting the budget line to the left and calculating the loss in total utility. d. varying the price of one good and observing the resulting quantities demanded of that good.