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How would the equilibrium price of ethanol motor fuel in the first half of 2008 compare to the price in 2007?
How would an increase in the price of gasoline abroad affect the equilibrium price of gasoline in the United States?
Explain why the market for wool would not be in equilibrium if the price of wool were 18.
Is the choice of plan (A, B, or C) endogenous or exogenous? Explain. Are total expenditures on videos endogenous or exogenous? Explain.
Explain why a situation of excess demand will result in an increase in the market price. Why will a situation of excess supply result in a decrease in the marke
Use supply and demand curves to illustrate two possible explanations for this pattern of price and quantity changes.
A = 10 percent increase in the price of automobiles reduces the quantity of automobiles demanded. What is the price elasticity of demand for automobiles?
Explain why we might expect the price elasticity of demand for speedboats to be more negative than the price elasticity of demand for light bulbs.
How would this affect the comparison between the price elasticity of demand for air travel for business travelers versus vacation travelers?
Explain why the price elasticity of demand for an entire product category is likely to be less negative than the price elasticity of demand for a typical brand.
What does the sign of the cross-price elasticity of demand between two goods tell us about the nature of the relationship between those goods?
What happens to the demand for beer when the price of nuts goes up? Are beer and nuts demand substitutes or demand complements?
Suppose the demand curve in a particular market is given by Q = 5- 0.5P. At what price will demand be unitary elastic?
Plot the supply and demand curves on a graph and show where the equilibrium occurs. Using algebra determine the market equilibrium price and quantity of coffee.
Find price elasticity of demand for prices equal to $3 and $4. At what price would the demand be unitary elastic?
With these data draw a graph of the linear demand curve for Granny's apple pies. Find the price elasticity of demand at each of the three prices.
What does the existence of scalping imply about the relationship between the official price P0 and the equilibrium price?
What might explain this seemingly strange pattern of prices and consumption levels?
What are your impressions of the game so far? What initial task did you delegate to each team member and why?
Explain how you would figure out the dollar/pound exchange rate implied by PPP. When might it be a bad idea to use the PPP theory in this way?
The Federal Reserve announces how quickly the money supply grew in the week ending ten days previously.
Continuing with the preceding problem, discuss how the transfer would affect the long-run nominal exchange rate between the two currencies.
How does its action change the long-run real exchange rate between home and foreign currency? How is the longrun nominal exchange rate affected?
Explain how the nominal dollar/euro exchange rate would be affected by permanent changes in the expected rate of real depreciation of the dollar against euro.
Discuss what happens to the expected real interest rate? Explain why the subsequent path of the real exchange rate satisfies the real interest parity condition.