Refer to the scenario above. If they are the only bidders in the auction and each of them uses his optimal strategy, who will win?

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's total variable cost?

A) $2,400 B) $2,000 C) $1,600 D) $800

Due to the lack of timely data for the price level and economic growth, the Fed's strategy

A) targets the exchange rate, since the Fed can control this variable. B) targets the price of gold, since it is closely related to economic activity. C) uses an intermediate target, such as an interest rate. D) stabilizes the consumer price index, since the Fed can control the CPI.