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Assume that the United States trades exclusively with Mexico and that the exchange rate between the U.S. and the Mexico is flexible.
Assume that Americans desire more goods that are made in the Mexico. Show and explain how this change in demand will affect each of the following:
The demand for U.S. dollars
The international value of the U.S. dollar
Now, assume that there is an increase in real interest rates in the Mexico, but not in the United States. Show and explain how this increase in interest rates will affect each of the following:
The quantity of U.S. dollars supplied in the foreign exchange market
Suppose that a new law requires every firm to provide its workers with free parking spaces. These spaces are worth $200 per year to workers, but cost firms $500 per year to provide
What determines price elasticity of demand for a product. key determinants of price elasticity of demand are as follows: i. Availability of close substitutes- gas stations across street, very elastic.
For each of the following production functions, determine the returns to scale. Check to see whether diminishing returns for labor and capital exist for each function (Q = quantity, L = labor, K = capital) a. Q = 3L + 2K b. Q = (2L + 2K)1/2 c. Q = 3L..
Using a two-dimensional diagram of supply and demand, Illustrate the case of a supply cooperative maximizing net revenue in the short-run. a) What is the optimization criterion for determining the quantity supplied by the cooperative? b) Label the pr..
According to our discussion in class, an Economic model of the decision of how fast to drive indicates an individual should choose the speed at which:
How will commercial airlines respond to the threat of new $27,500 fines for keeping passengers on the tarmac for more than 3 hours? What inefficiency will this create? I recently sold my used car. If no new production occurred for this transaction, h..
You have decided to purchase a large screen TV and the Rent to Own store. The TV would cost $1,200 but you will be making payments of $150 a month for a year. Assuming your MARR is 22%, compounded monthly, what is the present worth of this purchase?
An economy with nominal tax rates significantly higher than effective tax rates has
If the average interval between? firm’s price adjustments is relatively? short,
Assume a good where its equilibrium price is 40 and its equilibrium quantity is 3.0 units. Compute the supply surplus when price is 60. Take into consideration that the elasticity of supply is 1 and the elasticity of demand (-1)
You own a fresh vegetable stand. Last week you decided to raise your carrot prices from 79 cents per bunch to 99 cents per bunch. Subsequently, you noticed that several of your regular customers were buying 2 bunches instead of their usual one. In fa..
1. Note that the current and capital accounts in the U.S. Balance of payments (BOP) are mostly private transactions while the official settlements balance involves transactions between governments
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