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gtnhenbr [62]
3 years ago
14

Explain the law of one price and the theory of purchasing power parity. Why doesn't purchasing power parity explain all exchange

rate movements in the short run? What factors determine long-run exchange rates?
Business
1 answer:
Masteriza [31]3 years ago
6 0

Answer:

The law of one price establishes that the product or service price will remain the same for all the entire world.

Explanation:

The law of one price establishes that the product or service price will remain the same for all the entire world. It is necessary to take into account for this law that the price of the currency  needs to be also the same and that the price of the product or service would not be affected by other factors such as additional buyers or sellers in the market.

On the other hand the purchasing power parity refers to the idea of an equilibrium of currencies in exchange rates, it means that the power for purchasing will be represented in the same way in the different countries, and it is important to mention that this theory is base in the law of one price.

The  the long run equilibrium is an idea that in theory represents all the equilibrium of prices, quantities, and markets in general; on the other hand, for the short run equilibrium there are some limitations in which the market cannot be explained as properly and fully balanced.

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3 years ago
Crafting a strategy to compete in one or more foreign markets can be considered complex because 34) A) factors that affect indus
Wewaii [24]

Answer:

Options A, B, C, and E.

(Please check the explanation section before you judge or pick your answer)

Explanation:

The options A, B, C, and E are the options that are considered complex if we want to Craft a strategy to compete in one or more foreign markets.

Please take note that if the question asked us to pick which of the options is NOT a inherently complex reason when crafting a strategy to compete in one or more foreign markets then we would have picked Option D.

As given in the question, that is option D which says; '' buyer tastes and preferences creates challenges in standardizing products and services." Will not be a reason for crafting a strategy to compete in one or more foreign markets is inherently complex.

Countries due to globalization tends to participate in international trades. Competition in the international trade has its advantages as well as its disadvantages or risks.

To trade in the international market, countries must have their individual strategies and Option D above is NOT a inherently complex reason when crafting a strategy to compete in one or more foreign markets

4 0
3 years ago
Read 2 more answers
The Gap, Inc. has targeted teenagers and young adults in need of casual clothes, and through its GapKids stores, the parents or
Nataliya [291]

Answer:

The correct option is A, market segmentation

Explanation:

Market segmentation is the process of dividing customer base into distinct groups based on age,income,level of education,personality,perception and so on.

The purpose of segmenting the markets  is for the organization to satisfy the needs of these different groups based on their unique characteristics and to able to sell to them goods that  best match their status.

The scenario here is that Gap Inc,has successfully been able to discover the right set of people that its casuals best match.

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3 years ago
Researchers have discovered that "cyber-ostracism" by strangers elicits increased activity in the
Allisa [31]
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4 0
3 years ago
The Heating Division of Kobe International produces a heating element that it sells to its customers for $40 per unit. Its varia
san4es73 [151]

Answer:

$48

Explanation:

Calculation the minimum transfer price that the Heating Division should accept

Using this formula

Minimum transfer price=[New UVC + (Lost USP - Regular UVC)]

Let plug in the formula

Minimum transfer price=$28+ ($40- $20)

Minimum transfer price=$28+20

Minimum transfer price= $48

Therefore the minimum transfer price that the Heating Division should accept is $48

7 0
3 years ago
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