Answer the Next Question on the Basis of the Following

question 45

Multiple Choice

Answer the next question on the basis of the following table,which indicates the dollar price of libras,the currency used in the hypothetical nation of Libra.Assume that a system of freely floating exchange rates is in place. Suppose that Libra decided to import more U.S.products.We would expect the quantity of libras:

• A) demanded at each dollar price to rise and the dollar to depreciate relative to the libra.
• B) demanded at each dollar price to fall and the dollar to appreciate relative to the libra.
• C) supplied at each dollar price to rise and the dollar to appreciate relative to the libra.
• D) supplied at each dollar price to fall and the dollar to depreciate relative to the libra.

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Definitions:

Economic Profit

Economic profit is the difference between total revenue and total costs, including both explicit and implicit costs.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or output in the short term.

Total Variable Costs

The total of all costs that vary with the level of output, including costs such as materials and labor that change with the scale of production.

Profit-Maximizing Level

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