1. Which are the advantages and disadvantages of a country to have commercial relations with other countries?
Public good or common resource?
Does the airline industry produce a public good or common resource? Are the goods or resources rival, excludable, or neither? Explain.
Suppose the price of apples rises from $3.50 a pound to $4.00 and your consumption of apples drops from 30 pounds of apples a month to 20 pounds of apples. Calculate your price elasticity of demand of apples. What can you say about your price elasticity of demand of apples? Is it Elastic, Inelastic, or Unitary Elastic? Be sure t ...continues
Economic Systems Questions. See attached file for full problem description.
Since the September 11th attack there has been an increase in the demand for security personnel: police, air marshals, airport security, etc. How has the higher demand affected the equilibrium wage? In which direction do you think the labor supply and demand shifted? I personally see a shift in both directions. Security ...continues
The Hong Kong dollar's value is tied to the U.S. dollar. Explain how the following trade patterns would be affected by the appreciation of the Japanese yen against the dollar: (a) Hong Kong exports to Japan and (b) Hong Kong exports to the United States?
The Big Mac Price Index computed by the Economist has consistently found the U.S. dollar to be undervalued against some other major currencies, which seems to call for a rejection of the purchasing power parity theory. Explain why the index may not be a valid test of the theory.
High interest rates are commonly expected to strengthen a country’s currency because they can encourage foreign investment in securities in that country, which results in the exchange of other currencies for that currency. Yet, the peso’s value has declined against the dollar over most years even though Mexican interest rates ar ...continues
What is a managed float? What are the disadvantages of freely floating exchange rates that led countries to the managed float system?
What do you think or can you list the advantages and disadvantages of a strong currency and a weak currency (from the U.S. point of view)?
