You Are Made Better Off in Which of the Following

question 18

Multiple Choice

You are made better off in which of the following situations?

• A)You borrow 10,000 pesos, you earn income in dollars, the dollar depreciates against the peso, you must pay back the loan in pesos.
• B)You borrow $10,000, you earn income in pesos, the dollar depreciates against the peso, you must pay back the loan in dollars.
• C)You borrow $10,000, you earn income in pesos, the dollar appreciates against the peso, you must pay back the loan in dollars.
• D)You borrow 10,000 pesos, you earn income in pesos, the dollar depreciates against the peso, you must pay back the loan in pesos.
• E)You borrow 10,000 pesos, you earn income dollars, the dollar depreciates against the peso, you must pay back the loan in pesos.

---

Definitions:

Economic Profit

The difference between the total revenue earned by a firm and the total cost of inputs, including both explicit and implicit costs.

Implicit Costs

The opportunity costs of utilizing resources owned by the firm that could have been employed for other purposes.

Explicit Costs

Direct, out-of-pocket payments for resources employed in the production of goods or services, easily identified and measured.

Capital Intensive

A description of industries or businesses that require large amounts of capital investment compared to labor.