Assume that coffee and tea are substitutes. Given a downward sloping demand curve for tea, an increase in the price of tea will cause

Which of the following observations is true?

A. In the long run, more costs become variable. B. Fixed costs cannot be completely varied if the time period is sufficiently long. C. Fixed costs arise when some types of inputs can be bought only in big batches. D. Variable costs arise when inputs have a large productive capacity.

 Choose the letter of the diagram in Figure 36.2 that represents the shift in the foreign exchange market for dollars given the following situation, ceteris paribus: The Japanese remove some tariffs on American goods.

A. a. B. b. C. c. D. d.