Suppose There Are Only Two Countries in the World,countries a and B.If

question 64

Multiple Choice

Suppose there are only two countries in the world,countries A and B.If the currency of country A appreciates,the currency of country B

• A)can appreciate relative to other countries.
• B)must appreciate.
• C)may appreciate or depreciate,depending on the elasticity of demand for the exports of country A.
• D)must depreciate.
• E)may appreciate or depreciate,depending on the volume of trade between the two countries.

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Definitions:

Profit Maximization

The process or strategy by which a firm determines the price and output level that returns the greatest profit.

Block Pricing Scheme

A pricing strategy where different quantities of a product or service are sold at different prices, typically decreasing with volume.

Marginal Cost

The increased cost resulting from the production of an extra unit of a product or service.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.