Explain how a decrease in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate
A decrease in demand for capital goods is a decrease in investment demand. As investment demand decreases, the demand for loanable funds shifts left. This shift decreases the real interest rate. The decrease in the interest rate raises net capital outflow. The increase in net capital outflow shifts the supply of currency in the foreign exchange market to the right, reducing the real exchange rate.
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Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the price consumers pay for food
A) does not change, that is, it remains constant. B) falls. C) rises. D) might rise or fall depending on whether the demand for food is elastic or inelastic. E) might rise or fall depending on whether the monopoly's marginal revenue curve lies above or below its demand curve.
Figure 10-9 shows the demand and cost curves for a monopolist. Refer to Figure 10-9. What is the economically efficient output level?
Suppose there has been an increase in supply and a decrease in demand. In which of the following cases would the equilibrium quantity be indeterminate?
a. The supply curve shifts a measurable amount to the right. b. The demand curve shifts a measurable amount to the left. c. The relative size of the shifts in the two curves is unknown. d. The relative size of the shifts in the two curves is equal.
Consider a monopolist attempting to engage in limit pricing with total costs C(Q) = 100 + 2Q. The market (inverse) demand for its product is P = 100 ? 2Q. Currently, the monopolist produces 30 units of output. Assuming the potential entrant has the same cost structure as the incumbent monopolist, is it profitable for the entrant to produce 10 units of output?
A. No, since the market price of $20 is less than the average total cost of producing 10 units. B. No, since the market price of $50 is less than the average total cost of producing 10 units. C. Yes, since the market price of $50 is greater than the average total cost of producing 10 units. D. Yes, since the market price of $20 is greater than the average total cost of producing 10 units.