A firm uses two inputs, A and B. At its optimal choice of input proportions,

A firm that operates in Stage III of the short-run production function

A) has too much fixed capacity relative to its variable inputs. B) has too little fixed capacity relative to its variable inputs. C) has greatly overestimated the demand for its output. D) should try to increase the amount of variable input used.

When a country exports fewer goods and services than it imports, this is called

A. the terms of trade. B. the exchange rate. C. a balance of trade deficit. D. a balance of trade surplus.