The marginal rate of substitution is the rate at which a person is willing to substitute one good for another good while remaining on the same indifference curve

Refer to Figure 19-4. The equilibrium exchange rate is at A, $3/pound. Suppose the British government pegs its currency at $4/pound. At the pegged exchange rate,

A) there is a surplus of pounds equal to 600 million. B) there is a shortage of pounds equal to 200 million. C) there is a surplus of pounds equal to 400 million. D) there is a shortage of pounds equal to 400 million. E) there is a shortage of pounds equal to 600 million.

A monopoly is inefficient because: a. consumers are forced to pay higher prices for products

b. firms are able to earn economic profits. c. the cost of increased production is less than the value that society places on it. d. price exceeds marginal revenue.