7. A Big Mac costs $2.40 in the U.S. and 4.60 reals in Brazil. If the exchange rate is 2 reals per dollar, purchasing power parity predicts that (A) The dollar will appreciate as the demand for dollars rises in the long run. (B) The dollar will appreciate as the supply of dollars falls in the long run. (C) The dollar will depreciate as the demand for dollars falls in the long run. (D) The dollar will depreciate as the supply of dollars rises in the long run.

1. Figure 1 demonstrates that (A) In the short run, the monopolistic competitor produces an output $ Q_{b} $ but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, $ Q_{a} $. (B) It is not possible for a monopolistic competitor to produce the productively efficient output level, $ Q_{a} $, because of product differentiation. (C) It is possible for a monopolistic competitor to produce the productively efficient output level, $ Q_{a} $, if it is willing to lower its price from $ P_{b} $ to $ P_{a} $. (D) In the long run, the monopolistic competitor produces the minimum-cost output level, $ Q_{a} $, but in the short run its output of $ Q_{b} $ is not cost minimizing. Figure 2 In 2025, New Taipei City's Franchise and Concession Review Committee granted permission to firm A to enter the market for cable TV, ending the monopolies of firms B and C. Figure 2 shows the cable television market in New Taipei City.

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