Reference no: EM133080714
I. True/False/Uncertain - Briefly explain. No credit without an explanation.
Countries hit by a negative symmetric shocks outside a monetary union do not face adjustment prob- lems.
Theoretically, monetary unions should lead to more asymmetric shocks.
Pricing to market would lead to more price convergence in a monetary union.
More trade integration even with less symmetry can make a monetary union optimal.
With expected devaluation, an intermediate shock would not result in devaluation.
II. Problems - You have to show your work. No credit without an explanation
Suppose a perfectly competitive firm has marginal and total costs given by M C = 3 + 2q and T C = 2 + 3q + q2, respectively, where q is the quantity of output produced by the firm. In a monetary union the firm faces a constant price p1 = 9 for its product. Outside of the monetary union with a flexible exchange rate it faces a 50-50 chance of p2 = 11 or p3 = 7. The firm decides on the profit maximizing quantity q by setting p = MC which maximizes its profit π = (p ∗ q) - TC.
(a) What are the firm's profit maximizing quantity, price and profit in a monetary union?
(b) What is the average profit with a flexible exchange rate?
(c) Does more exchange rate certainty in a monetary union lead to higher profits for the firm?
Identify and briefly describe three main benefits associated with monetary unions.
|
Price elasticity of some items in different markets
: Q1. The owner of a small chain of gasoline stations in a large Midwestern town read an article in a trade publication stating that the own price elasticity of d
|
|
What is firm c best response
: There is an oligopolistic market with three firms: A, B, and C. The market demand is Q=300-2P. Firm A's cost is TCA=75Q. Firm B's cost is TCB=65Q. Firm C's cost
|
|
Assess the impact of covid-19
: FAO has implemented an array of tools to support policy analyses and assess the impact of COVID-19 on food and agriculture, value chains, food prices, food secu
|
|
Greater success in building relationships
: What question might he ask the other first -grade teacher to learn how to achieved her greater success in building relationships?
|
|
Average profit with flexible exchange rate
: I. True/False/Uncertain - Briefly explain. No credit without an explanation.
|
|
What is the carrying value of the patent at December
: Expenditures of $54,500 for successful litigation in defence of the patent were paid on January 1, What is the carrying value of the patent at December 31, 2017
|
|
What are the four market terms in economics
: What are the four market terms in economics? Breifly explain
|
|
What are the levelized or life-cycle costs of energy
: Compared with wind and solar, what are the levelized or life-cycle costs of energy produced from hydro, geothermal, and nuclear facilities?
|
|
Labor productivity in the pacific
: Make an abstract and introduction about the influence of techonology on labor productivity in the pacific?
|