Economics : Micro 4
Economics : Micro 4
4th Edition
ISBN: 9781305436855
Author: MCEACHERN
Publisher: CENGAGE L
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Chapter 4, Problem 3.4PA
To determine

The reason the firm increases the quantity supplied when the price of the good increases.

Concept Introduction:

Law of supply states that as the price of the good, increases the quantity supplied of the good increases and vice-versa, other things remaining same.

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Responsd to Luis Rodriguez    1800 tons of pomegranates a year is a lot of sweetness! So, you can get 71 Afghanis for $1? How cool. Does that mean you can buy a lot of stuff in Afghanistan for only $1? How do you know that your purchasing power in Afghanistan is stronger than in the United States? Yes, with an exchange rate of 71 Afghan Afghani for 1 US dollar, you can buy many things in Afghanistan for just $1. However, purchasing power isn't solely determined by the exchange rate. It also depends on the cost of goods and services in each country. For example, if a meal in Afghanistan costs 200 Afghanis, you would need about $2.82 to buy that meal in US dollars (since 200 Afghanis divided by 71 Afghanis per dollar equals approximately $2.82). So, while the exchange rate allows you to get more Afghanis for your dollars, you also need to consider how much things cost in Afghanistan. Now that the world seems to like Afghani stuff and is buying more of it, does that mean your…
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