In the United States, a cup of hot chocolate costs $5 . In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?
a. 1/2 cup of that country's hot chocolate per cup of U.S. hot chocolate
b. 1 cup of that country's hot chocolate per cup of U.S. hot chocolate
c. 2 cups of that country's hot chocolate per cup of U.S. hot chocolate
d. None of the above is correct.
b
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Refer to the figure above. Which indifference curve depicts the highest level of utility?
A) IC1 B) IC2 C) IC3 D) IC4
Suppose an individual has state-independent tastes and invests in risky stocks rather than safe bonds. We can infer that he must be risk loving.
Answer the following statement true (T) or false (F)
Refer to the accompanying figure. Total producer surplus in this market is:
A. $10 B. $125 C. $500 D. $250
We cannot predict the effect on the market clearing price, but know that the equilibrium quantity will decrease when
A. supply and demand for a product simultaneously decrease. B. supply decreases and demand increases. C. supply increases and demand decreases D. supply and demand for a product simultaneously increase.