The Discovery of a Significant New Source of Oil That

question 70

Multiple Choice

The discovery of a significant new source of oil that can be exported will lead to:

• A) depreciation of the currency and a loss of comparative advantage in other sectors.
• B) depreciation of the currency and a gain of comparative advantage in other sectors.
• C) appreciation of the currency and a loss of comparative advantage in other sectors.
• D) appreciation of the currency and a gain of comparative advantage in other sectors.

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Definitions:

Profit-Maximizing Level

The output level at which a firm achieves the highest possible profit, where marginal cost equals marginal revenue.

Market Price

The current price at which an asset or service can be bought or sold.

Price Taker

An economic actor that has no control over the market price and must accept the prevailing market price.

Inelastic Demand Curve

A graphical representation of a situation where a change in price leads to a relatively small change in the quantity demanded.