Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Chapter 1, Problem 5RQ
To determine
Exchange rate between US dollar and Japanese yen.
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The demand for Australian-made motorcycles in Japan is given by: Japanese demand = 10000 –0.001(price of Australian motorcycles in yen).
Similarly, the demand for Japanese-made motorcycles in Australia is: Australian demand = 30 000 –0.2(price of Japanese motorcycles in dollars).
The domestic price of an Australian-made motorcycle is $20 000, and the domestic price of a Japanese-made motorcycle is ¥2 500 000. From the perspective of Australia, find the real exchange rate in terms of motorcycles and net exports of motorcycles to Japan,
if:
a) the nominal exchange rate is 100 yen per dollar
b) the nominal exchange rate is 125 yen per dollar.
c) How does an appreciation of the dollar affect Australian net exports of motorcycles (considering only the Japanese market)?
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The prediction is that global consumption of crude oil will exceed production by 20 million barrels this year, which means there will be a shortage of supply. This could lead to further price increases if demand continues to grow, which would result in higher costs for consumers and businesses.
However, this imbalance is likely to be corrected over time as higher prices incentivize more production, while lower demand could lead to a reduction in consumption. Additionally, new sources of supply could come up or existing sources could increase their output in response to higher prices. In the…
Consider the economy of Russia, which produces oil and cars that are sold both domestically and internationally. Suppose an increase in foreign income causes an increase in the world demand for oil, whereas the supply does not change.
The following graph shows the market for oil in Russia.
Adjust the following graph to show the effect of a higher demand for oil on the economy of Russia.
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Chapter 1 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
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