Use the Following to Answer Questions

question 146

Multiple Choice

Use the following to answer questions:
Figure: Computers and Books
-(Figure: Computers and Books) According to the figure, if country A produces only the good for which it has a comparative advantage and then consumes the other good by exchanging computers for books, then:

• A) country A will consume outside its PPF but country B will consume inside its PPF.
• B) country A will consume inside its PPF but country B will consume outside its PPF.
• C) both countries will consume inside their own PPFs.
• D) both countries will consume outside their own PPFs.

Understand the relationship between price, average total cost, and profit maximization in a perfectly competitive market.

Identify the conditions under which a perfectly competitive firm should increase or decrease production to maximize profits.

Recognize the significance of the equality between price and marginal cost in profit maximization.

Determine the short-run production decisions of a perfectly competitive firm based on price comparisons with average total cost, marginal cost, and average variable cost.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not related to the day-to-day operations.

Net Cash Provided

The sum of cash inflows minus cash outflows over a period, typically highlighted in a company’s cash flow statement.

Market Securities

Financial instruments that are traded in financial markets, such as stocks, bonds, and derivatives, representing investment vehicles for owners.

Financing Activities

Transactions that result in changes in the size and composition of the equity and borrowed funds of a business.