Use the following graph to answer the next question.
Given the graph above, which level of output should the perfectly competitive firm choose?
A. X2, since at this level of output the difference between MR and MC is maximized
B. X3, since any increase in output beyond that point will reduce profits
C. X1, since a lower level of output will reduce profits
D. either X1 or X3, since profits will be the same
Answer: B
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According to the principal of comparative advantage a country
A) that produces goods at the lowest absolute cost will export those goods. B) will import goods it can produce at the lowest relative cost. C) will export goods it can produce at the lowest relative cost. D) will only import those goods that it cannot produce for itself.
The silverware industry has been in serious decline since the 1980s. Family dining habits are less formal so people purchase less silverware. Also, in 2006-2008, the price of silver increased from $5 to $20 per ounce. Which graph in Figure 4-12 best illustrates these developments?
a.
1
b.
2
c.
3
d.
4
Figure 4-12
