Suppose an economy consists of the Coal, Electric, and Steel sectors. Denote the prices (that is, dollar values) of the total annual outputs of the Coal, Electric, and Steel sectors by PC, PE, and Ps, respectively. Suppose the general solution to find equilibrium prices that make each sector's income match its expenditures is pc = 0.85ps, PE=0.83ps, and på is free. One set of equilibrium prices for this economy is pc = $85, P₁ = $83, and p = $100. Find another set. Suppose the same economy used Japanese yen instead of dollars to measure the values of the various sector's output. Would this change the problem in any way? Discuss. If Ps = $300, then pc = $ 255 and P₁ = $ 249. (Type integers or decimals.) How would changing the unit of measurement to Japanese yen change this problem? O A. It has the same effect as multiplying all equilibrium prices by a constant. The prices will change, but the ratios of the prices will remain the same. B. It has the same effect as multiplying all equilibrium prices by their reciprocal and some constant. The prices will change, but the ratios of the prices will remain the same. O C. It has the same effect as multiplying all equilibrium prices by their reciprocal and some constant. The prices and the ratios of the prices will change. O D. It has the same effect as multiplying all equilibrium prices by a constant. The ratios of the prices will change, but the prices will remain the same.
Suppose an economy consists of the Coal, Electric, and Steel sectors. Denote the prices (that is, dollar values) of the total annual outputs of the Coal, Electric, and Steel sectors by PC, PE, and Ps, respectively. Suppose the general solution to find equilibrium prices that make each sector's income match its expenditures is pc = 0.85ps, PE=0.83ps, and på is free. One set of equilibrium prices for this economy is pc = $85, P₁ = $83, and p = $100. Find another set. Suppose the same economy used Japanese yen instead of dollars to measure the values of the various sector's output. Would this change the problem in any way? Discuss. If Ps = $300, then pc = $ 255 and P₁ = $ 249. (Type integers or decimals.) How would changing the unit of measurement to Japanese yen change this problem? O A. It has the same effect as multiplying all equilibrium prices by a constant. The prices will change, but the ratios of the prices will remain the same. B. It has the same effect as multiplying all equilibrium prices by their reciprocal and some constant. The prices will change, but the ratios of the prices will remain the same. O C. It has the same effect as multiplying all equilibrium prices by their reciprocal and some constant. The prices and the ratios of the prices will change. O D. It has the same effect as multiplying all equilibrium prices by a constant. The ratios of the prices will change, but the prices will remain the same.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose an economy consists of the Coal, Electric, and Steel sectors. Denote the prices (that is, dollar values) of the
total annual outputs of the Coal, Electric, and Steel sectors by PC, PE, and Ps, respectively. Suppose the general
solution to find equilibrium prices that make each sector's income match its expenditures is pc = 0.85ps,
PE=0.83ps, and på is free. One set of equilibrium prices for this economy is pc = $85, P = $83, and p = $100. Find
another set. Suppose the same economy used Japanese yen instead of dollars to measure the values of the various
sector's output. Would this change the problem in any way? Discuss.
If ps = $300, then pc = $ 255 and P₁ = $ 249. (Type integers or decimals.)
How would changing the unit of measurement to Japanese yen change this problem?
O A. It has the same effect as multiplying all equilibrium prices by a constant. The prices will change, but the
ratios of the prices will remain the same.
B.
It has the same effect as multiplying all equilibrium prices by their reciprocal and some constant. The prices
will change, but the ratios of the prices will remain the same.
O C.
It has the same effect as multiplying all equilibrium prices by their reciprocal and some constant. The prices
and the ratios of the prices will change.
O D.
It has the same effect as multiplying all equilibrium prices by a constant. The ratios of the prices will change,
but the prices will remain the same.
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