Modern Principles: Macroeconomics
4th Edition
ISBN: 9781319098773
Author: Tyler Cowen, Alex Tabarrok
Publisher: Worth Publishers
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Question
Chapter 20, Problem 20TPS
Subpart (a):
To determine
The change in price and nominal exchange rate.
Subpart (b):
To determine
The impact of PPP theorem in the long run and short run.
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Students have asked these similar questions
In the following table, complete the third column by determining the quantity sold in each country at a price of $18 per toy train. Next, complete the
fourth column by calculating the total profit and the profit from each country under a single price.
Price
Single Price
Quantity Sold
Price Discrimination
Country
(Dollars per toy
train)
(Millions of toy
trains)
Profit
(Millions of
dollars)
Price
(Dollars per toy
train)
Quantity Sold
(Millions of toy
trains)
Profit
(Millions of
dollars)
France
18
Russia
18
Total
N/A
N/A
N/A
N/A
Suppose that as a profit-maximizing firm, Le Jouet decides to price discriminate by charging a different price in each market, while its marginal cost of
production remains $8 per toy.
Complete the last three columns in the previous table by determining the profit-maximizing price, the quantity sold at that price, the profit in each
country, and total profit if Le Jouet price discriminates.
Le Jouet charges a lower price in the market with a relatively
elastic…
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Chapter 20 Solutions
Modern Principles: Macroeconomics
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