If oranges sell for $100 per crate in the United States and 5,000 pesos per crate in Mexico, thelaw of one price indicates that you should be able to exchange $1 forSelect one:OA 0.02 peso.O B. 5 pesos.O C. 50 pesos.O D. 500 pesos.

As economies and societies developed, the study of economics got more complicated. Economic agents…

Answered: If oranges sell for $100 per crate in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The theory of comparative advantage: O a. Claims that economic well-being is enhanced if each country's citizens produce only a single product. Ob. Claims that economic well-being is enhanced when all countries compare commodity prices after adjusting for exchange rate differences in order to standardize the prices charged by all countries. O. Claims that economic well-being is enhanced if each country's citizens produce that which they have a comparative advantage in producing relative to the citizens of other countries, and then trade production. O d. Claims that no country has an absolute advantage over another country in the production of any good or service.
If one Canadian dollar buys US$0.85, and one Euro buys US$1.20, then one Euro should buy O a. C$1.02 O b. C$1.41 O c. C$2 O d. C$1.64
6
Assume in 2010, 1 Swiss franc cost.55 British pounds and in 2012 it cost .52 British pounds. How much would 1 British pound purchase in Swiss francs in 2010 and 2012? O 2010: 1.81 francs, 2012: 1.92 francs 2010: 1.78 francs, 2012: 1.96 francs O 2010: 1.71 francs, 2012: 2.00 francs O 2010: 1.73 francs, 2012: 1.97 francs
Q25 If country A has wages that are substantially less than those in country B, ... a. The pattern of comparative advantage will depend also on the relative productivities of labour in the two countries. b. Country A will have an absolute advantage over country B. c. Country B will import from A but will not be able to export to country A. d. Country B will benefit by placing tariffs on imports from country A. e. Country A will not have to subsidise its export industries.
The PPP conclusion that exchange rates are determined solely by changes in relative price levels Select one: O a. rests on the assumption that all goods are identical in both countries Oa. O b. does not take into account that some goods and services are not traded Oc. is accurate as a long run proposition O d. both a and b are correct O e. all are correct
In a two-country, two-product world, the statement 'Germany enjoys a comparative advantage over France in cars relative to ships' is equivalent to O a. a. Germany having a comparative advantage over France in cars and ships. O b. France having a comparative disadvantage compared to Germany in cars and ships. O c. France having no comparative advantage over Germany. O d. France should produce cars. O e. France having a comparative advantage over Germany in ships. L
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Assume that initially PPP holds, the theory of PPP suggests that if one country's price level rises relative to another's, its currency is and should Select one: O a. undervalued; depreciate O b. overvalued; depreciate O c. overvalued; appreciate O d. remain unchanged O e. undervalued; appreciate Next page to search
Suppose that the forward rate between $ and British Pound at 3 months is F=1.5 If you are a trader expecting that the sport rate in 3 months will be 2, you should... You should contract today to buy forward foreign currency (British Pound) in the future for 2, expecting to be able to sell at 1.5 You should contract today to buy forward foreign currency (British Pound) in the future for 1.5, expecting to be able to sell at 2 You should contract today to sell forward foreign currency (British Pound) in the future for 1.5, expecting to be able to buy at 1.5 You should contract today to sell forward foreign currency (British Pound) in the future for 1.5, expecting to be able to buy at 2
Suppose that a Big Mac costs $6 in the US, and Yuan 12 in China. You are told that the exchange rate between $ and Yuan is Yuan=$0.5 From what you know about PPP theory and Law of One Price, the market value of the Yuan is.. O Overavalued O Just right O undervalued
If the price of an atomic burger is $3 CAD in Toronto and 4 Bottle Caps in New Vegas, and the Real Exchange Rate is 1.5, then the exchange rate is OA 09 Bottle Caps per CAD. O B. 1.125 Bottle Caps per CAD OC. 16 Bottle Caps per CAD. OD. 2 Bottle Caps per CAD. O E. none of the above

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If oranges sell for $100 per crate in the United States and 5,000 pesos per crate in Mexico, the law of one price indicates that you should be able to exchange $1 for Select one: OA 0.02 peso. O B. 5 pesos. OC. 50 pesos. O D. 500 pesos.