Commodity Money: The value of that particular currency is related to the commodity of which that currency is made like gold coins, silver coins, or it can be said that the value of the currency is same as the value of the commodity of which the currency is made of. Commodity-basket Money: The value of that particular currency is measured in terms of one particular commodity like the value of paper currency is measured in terms of gold. Fiat Money: The value of that particular currency is related to the demand and supply of that currency and it is not related to the material of which the currency is made up of. This money is treated as legal tender by the government. To identify: The type of money used in each situation.

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profit maximizing and loss minamization fire dragon co mindtap

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Chapter 14, Problem 2P

To determine

Concept Introduction:

Commodity Money:

The value of that particular currency is related to the commodity of which that currency is made like gold coins, silver coins, or it can be said that the value of the currency is same as the value of the commodity of which the currency is made of.

Commodity-basket Money:

The value of that particular currency is measured in terms of one particular commodity like the value of paper currency is measured in terms of gold.

Fiat Money:

The value of that particular currency is related to the demand and supply of that currency and it is not related to the material of which the currency is made up of. This money is treated as legal tender by the government.

To identify: The type of money used in each situation.

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profit maximizing and loss minamization fire dragon co mindtap

Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…