If Allan Lives in Boston and Decides to Buy a Pair

question 138

Multiple Choice

If Allan lives in Boston and decides to buy a pair of hockey skates from Canada for $100,and the Canadian he bought them from buys a baseball hat and jersey for $100 from Boston,then the U.S.:

• A)net exports and net capital outflow are both zero.
• B)net exports and net capital outflow both equal -$100.
• C)net exports is zero and net capital outflow is -$100.
• D)net exports equals -$100 and net capital outflow is zero.

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Definitions:

MRP = MRC Rule

The principle that to maximize profit (or minimize losses), a firm should employ the quantity of a resource at which its marginal revenue product (MRP) is equal to its marginal resource cost (MRC), the latter being the wage rate in a purely competitive labor market.

Profit-maximizing Firm

A company that adjusts its production and sales levels to achieve the highest possible profit based on its cost structure and market price.

MRP = MRC

An equality suggesting that the marginal revenue product (additional revenue from one more unit of an input) equals the marginal resource cost (cost of acquiring one additional unit of the input).

Resource Price

The cost associated with acquiring resources needed for production, such as labor, land, and capital.