If an individual has a constant MRS of shoes for sneakers of 3/4 (that is, he or she is always willing to give up 3 pairs of sneakers to get 4 pairs of shoes) then, if sneakers and shoes are equally costly, he or she will
a. buy only sneakers.
b. buy only shoes.
c. spend his or her income equally on sneakers and shoes.
d. wear sneakers only 3/4 of the time.
a
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If the fundamental value of the exchange rate is ________ than the official (fixed) exchange rate, the country has an ________ problem, and it will gain reserves
A) less; overvaluation B) greater; overvaluation C) less; undervaluation D) greater; undervaluation
Which of the following is true about a monopolistically competitive firm?
a. It can earn an economic profit in the short run, but not the long run. b. It can earn an economic profit in the short run and the long run c. It can earn an economic profit in the long run, but not the short run d. It cannot earn an economic profit in either the short or long run