Which of the following statements is the MOST accurate?
A) If PPP holds true, then the law of one price holds true for every commodity as long as the reference baskets used to reckon different countries' price levels are the same.
B) If the law of one price holds true for every commodity, PPP must hold automatically.
C) If the law of one price holds true for every commodity, PPP must automatically hold as long as the reference baskets used to reckon different countries' price levels are the same.
D) If the law of one price does not hold true for every commodity, PPP cannot be true as long as the reference baskets used to reckon different countries' price levels are the same.
E) If PPP holds true, then the law of one price must hold true automatically.
C
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Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total fixed costs are:
A. $5,000. B. $500. C. $0.50. D. $50.
The market demand for a monopoly firm is estimated to be:Qd = 100,000 - 500P + 2M + 500PRwhere Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $50,000 and $20, respectively, in 2016. The average variable cost function is estimated to beAVC = 520 - 0.03Q + 0.000001Q2Total fixed cost in 2016 is expected to be $4 million. The profit-maximizing price for 2016 is
A. $100. B. $260. C. $520. D. $80. E. $560.