Suppose a company increases production from a point where marginal cost equals average total cost to a point where marginal revenue and marginal cost are equal. Is it a good idea for the company to do this? Why?
A. No, average total costs have increased which means the company is not minimizing losses.
B. Yes, because average variable costs are always less than average total costs.
C. No, the previous level of output was the most efficient because it had the lowest average total cost.
D. Yes, even though the previous level of output had minimized the average total cost, there was still profit to be earned by producing additional units.
Answer: D
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An increase in U.S. imports of goods and services from the European Union (EU) countries will result in a(n) ________ euro and a(n) ________ U.S. dollars in the foreign exchange market.
A. decrease in the demand for; decrease in the supply of B. increase in the demand for; increase in the supply of C. surplus of; shortage of D. increase in the supply of; increase in the demand for
The law of one price applied to the international marketplace is called:
a. real exchange rates. b. nominal exchange rates. c. arbitrage. d. purchasing-power parity.