The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which
a. total revenue is equal to variable cost.
b. total revenue is equal to fixed cost.
c. total revenue is equal to total cost.
d. profit is maximized.
D
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Lower transaction costs are a benefit of fixed exchange rates. Therefore, relative prices in two trading nations linked by fixed exchange rates should:
A) experience more price divergence. B) experience more price convergence. C) have less arbitrage and more speculation. D) have lower costs of production.
Sticky wages occur because:
A. unions often negotiate wages for several years in advance. B. wages can only be changed at the end of contracts, as opposed to final good prices which can change anytime. C. employers must wait until the current contract ends to cut someone's pay. D. All of these are true.