Suppose,under a System of Flexible Exchange Rates,a Small TV Costs

question 8

Multiple Choice

Suppose,under a system of flexible exchange rates,a small TV costs $150 in the United States and 15,000 yen in Japan.Other things being equal,the exchange rate is

• A) 1 yen equals $0.15.
• B) $1 equals 15 yen.
• C) 1 yen equals $0.01.
• D) $1 equals 150 yen.
• E) $1 equals 1,500 yen.

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Definitions:

Perfect Competition

Perfect competition describes a market structure where competition is at its greatest possible level, with numerous firms, no barriers to entry, and price taking behavior.

MR < MC

A scenario where marginal revenue is less than marginal cost, suggesting it is not profitable to produce additional units.

Marginal Cost

A measurement of the cost incurred by producing one additional unit of a product or service.

Average Variable Cost

The per-unit cost that varies, calculated through the division of total variable costs by the quantity of products made.