Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 12, Problem 1SPA
To determine
What is the type of market that Lin operates and what determines the
Expert Solution & Answer
Explanation of Solution
The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of
The price is determined at the point of equilibrium between the market
The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.
Economics Concept Introduction
Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.
Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.
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Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp.
Suppose the nominal exchange rate is 20 Flops per Gulp.
A Guilderian trader buys a 120 Flop barrel of Florish pickles by exchanging 6 Gulps, and a Florish trader buys a 4 Gulp crate of Guilderian apples by exchanging 80 Flops.
Then the Gulp depreciates to 10 Flops per Gulp.
Instructions: Enter your answers as whole numbers.
How much must the Guilderian pay for the same 120 Flop barrel of pickles?
Gulps
How much must the Florish trader pay for the same 4 Gulp crate of apples?
Flops
Chapter 12 Solutions
Macroeconomics
Ch. 12.1 - Prob. 1RQCh. 12.1 - Prob. 2RQCh. 12.1 - Prob. 3RQCh. 12.1 - Prob. 4RQCh. 12.2 - Prob. 1RQCh. 12.2 - Prob. 2RQCh. 12.2 - Prob. 3RQCh. 12.3 - Prob. 1RQCh. 12.3 - Prob. 2RQCh. 12.3 - Prob. 3RQ
Ch. 12.4 - Prob. 1RQCh. 12.4 - Prob. 2RQCh. 12.5 - Prob. 1RQCh. 12.5 - Prob. 2RQCh. 12.5 - Prob. 3RQCh. 12.6 - Prob. 1RQCh. 12.6 - Prob. 2RQCh. 12.6 - Prob. 3RQCh. 12.6 - Prob. 4RQCh. 12 - Prob. 1SPACh. 12 - Prob. 2SPACh. 12 - Prob. 3SPACh. 12 - Prob. 4SPACh. 12 - Prob. 5SPACh. 12 - Prob. 6SPACh. 12 - Prob. 7SPACh. 12 - Prob. 8SPACh. 12 - Prob. 9SPACh. 12 - Prob. 10APACh. 12 - Prob. 11APACh. 12 - Prob. 12APACh. 12 - Prob. 13APACh. 12 - Prob. 14APACh. 12 - Prob. 15APACh. 12 - Prob. 16APACh. 12 - Prob. 17APACh. 12 - Prob. 18APACh. 12 - Prob. 19APACh. 12 - Prob. 20APACh. 12 - Prob. 21APACh. 12 - Prob. 22APACh. 12 - Prob. 23APA
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