Suppose that there is a French shipbuilder that imports American made aluminum for parts in its ships. The French shipbuilder ne
eds to purchase aluminum from the American producer for $100,000. Question: At the equilibrium exchange rate, how much does it cost to purchase $100,000 worth of aluminum from the American producer
1 answer:
Answer:
€67,000
Explanation:
The computation o the cost is shown below:
But before that first we have to determine the exchange rate at which the quantity demanded equal to quantity supplies
As we can see that from the table $1.5 per euro exchange rate, the quantity demanded equal to quantity supplied
That means € 1 = $ 1.5
So,
$1 = € 1 ÷ 1.5
So,
Euro exchange rate = €0.67 per dollar
Now
Worth of exchange is
= $100,000 × € 0.67 per dollar
= €67,000
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Answer:
Profit-maximizing price per drug treatment is $2,000
Explanation:
The "cost of production" (cost of providing all treatments) is given by the area under the cost curve
(The cost curve is the straight line C = 10Q)
It is a right triangle with one side being the quantity (Q) and the other being the cost of the last unit being produced (10Q)
So the cost of production is:
Revenue is given by P * Q = (3,000 - 10Q) * Q
Profit = Revenue - Cost of production = 3,000Q - -
To find maximum, take derivative and solve for:
3,000 - 30Q = 0 => Q = 100
Profit-maximizing quantity is 100. The price will then be P = 3,000 - 10*100 = $2,000