The opportunity cost of 1 wristwatch is 4 wall clocks in Japan and 2 wall clocks in Germany. If the nations split the difference between the willingness to pay and the willingness to accept, the terms of trade would be 3 wristwatches per wall clock.

A monopolistic competitor behaving in a profit-maximizing way will

A) not advertise. B) advertise as much as it can in order to increase its sales. C) advertise to the point where the additional sales from advertising equal the additional marginal costs of the product. D) advertise to the point where the additional revenue from one more dollar of advertising just equals the extra dollar cost of advertising.

Long-run aggregate supply reflects

A) total production in the economy at full employment. B) total spending in the economy at full employment. C) both production and spending in the economy. D) only foreign production from U.S. subsidiaries.