Chapter 7. Problems 3
Suppose that ex is the exchange rate between the U.S. dollar and the Chinese yuan in that ex indicates the number of yuan that can be purchased with one dollar. The demand for dollars, denoted, D$, is given by the equation D$= 2,800 - 200ex. The supply of dollars, denoted, S$, is given by the equation S$ = 400 + 100ex.
(a) Calculate the demand for dollars and supply of dollars at exchange rates between 0 and 12 increments of one.
(b) Graph the demand for dollars and supply of dollars against the exchange rate. What is the value of the equilibrium exchange rate?
(c) Suppose the demand for dollars increases by 300 billion at each exchange rate. Explain if the increase in demand results from a large purchase by the Chinese of a new American-made airplane or a large purchase by Americans of new lower priced Chinese-made high definition televisions. Calculate the new demand for dollars at each exchange rate and graph the new demand curve. What is the new equilibrium exchange rate, given the original supply of dollars?
(d) Suppose the supply of dollars increases by 600 billion at each exchange rate. Explain if the increase in supply results from a large purchase by the Chinese of a new American-made airplane or a large purchase by Americans of new lower priced Chinese-made high definition televisions. Calculate the new demand for dollars at each exchange rate and graph the new supply curve. What is the new equilibrium exchange rate, given the original demand for dollars?

Solution Summary

The problem set deals with issues under Economics: demand and supply curve estimation.

Suppose the market demand for pizza is given by Qd=300-20p and the market supply for pizza given by Qs=20p-100, where P=price (per pizza).
Graph the supplyanddemand schedule for pizza using $5 through $15 as the value of p. In equilibrium, how many pizzas would be sold at what price?

1. Which of the following items go together? and why?
A. Change in demand
B. Change in quantity demanded
C. Change in price
D. Movement along the demandcurve
E. Shifting the demandcurve
F. Change in income
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2. Which of the following items go t

The question asked that suppose that the Organization of Petroleum Exporting Countries raises oil prices by 50 percent in 2005. What effect will thishave on the U.S. Aggregate demandcurve? On the U.S. Short-run aggregate supplycurve?

1. Find a product (possibly a commodity) traded in the global market and examine how the price of the product has changed over the past 10 years. How have these price changes reflected the law of supplyanddemand? Be sure to discuss both movement along the supply/demandcurve as well as shifts in the curves. (A graph in excel,

A product's DemandCurve is: Qd=25-P and its SupplyCurve is: Qs =10 + 2P
a. When P = $20 WHAT is the difference, if any between Qd and Qs
b. When P= 43, what is the difference if any between Qd and Qs
c. What are the equilibrium values of P and Q.

6) Consider a country that initially consumes 100 pairs of shoes per hour, all of which are imported. The price of shoes is $40 per pair before a ban on importing them is imposed. Use a graph to explain what happens to the price of shoes and the quantity of shoes consumed after a total ban on imports.

Please draw these four graphs carefully as you would for a workplace memo. There are no equations or numbers in this exercise.
1.Demand increases; Supply increases. [Both curves move in the same direction.]
a.Demand increases more than Supply increases. (i.e. the D curve shifts more to the right than the Supplycurve shi

Given the data in the attachment on gasoline supplyanddemand:
a) What is the equilibrium price?
b) How large a market shortage would exist if government set a price ceiling of $2 per gallon?
6. Illustrate what's happening to oil prices in the World View attached.
a) Which direction did the demandcurve shift?
b