1 a market research firm has determined that the demand for, Ask an Expert

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1. A market research firm has determined that the demand for economy cars drops by 3% when the price of these cars increases by 1%. Based on this information, the demand elasticity for economy cars is ___.

a) 3

b) 200%

c) 0.333

d) 1

2. The Economist publishes annually the "Big Mac Index" by which they compare the prices of the McDonald's Corporation's Big Mac hamburger around the world. The index estimates the exchange rates for currencies based on the assumption that the burgers in question are the same across the world and therefore, the price should be the same. If a Big Mac costs USD 3.73 in the United States and JPY 320 in Japan, what is the estimated exchange rate of yen per dollar as hypothesized by the Hamburger index?

a) JPY 85.79/USD

b) USD 0.00012/JPY

c) USD 0.015/JPY

d) JPY 87.20/USD

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92696454

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