-Using the Above Figure, an Increase in the Demand for Dutch

question 447

Multiple Choice

-Using the above figure, an increase in the demand for Dutch goods by U. S. consumers will lead to

• A) an appreciation in the Dutch currency.
• B) an increase in the supply of Dutch currency as foreign exchange.
• C) a depreciation in the Dutch currency.
• D) a decrease in the supply of Dutch currency as foreign exchange.

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of the business activity.

AVC

Average Variable Cost is the total variable costs divided by the quantity of output, representing the variable cost per unit of output.

MC = MR

An economic principle stating that to maximize profits, firms should produce up to the point where marginal cost equals marginal revenue.

MC = MR

The principle that profit maximization occurs when a firm's marginal cost (MC) equals its marginal revenue (MR).