Answer:
1) Colombians pay $ 12,696,000 per car.
2) Consumers now pay the price of $10,948,000 per car.
Explanation:
1) Given that Colombia imports cars from Australia, and the free market price is $ 9,200.00 per car, if the tariff on imports in Colombia is initially 38%, Colombians pay $ 12,696,000 per car.
This arises from the following calculation:
9,200.00 x 1.38 = X
12.696.00 = X
2) Since that as a result of the Uruguay Round, Colombia reduces its import tariffs to 19%. Assuming the price of cars is still $ 9,200.00 per car, consumers now pay the price of $10,948,000 per car.
This arises from the following calculation:
9,200,000 x 1.19 = X
10,948,000 = X
Answer:
Demand for luxury cars will decrease massively today.
Explanation:
Demand for Luxury items is highly Elastic (>1). This means that quantity demanded will respond proportionately higher to price change.
Future Expectations about price also determine demand.
- If prices are expected to fall in future, demand will decrease today (postponed at future lower prices). If prices are expected to rise in future, demand will increase today (reduced at future higher prices).
- However its important that these are not necessity goods, whose consumption urgency makes their demand inelastic i.e less respondent to price.
So : Luxury Cars having Elastic Demand, coupled with future lower prices & better credit facilities - will reduce their demand massively today, as it's expected to be highly demanded in future period rather than current period
Question:
If Korea is capable of producing either shoes or soccer balls or some combination of the two then a. Korea should specialize in the product in which it has an absolute advantage.
b. It would be impossible for Korea to have an absolute advantage over another country in both products.
c. Korea is efficient in the production of both goods.
d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.
Answer:
d. Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.
Explanation:
Opportunity cost is defined as the cost of choosing or picking particular option or alternative over another option or alternative.
In question, we are told that Korea is capable of producing either shoes or soccer balls or some combination of the two.
Therefore Korea would have to make a list of priorities also know as alternatives or options, to decide if
a. they would produce shoes,
b. or soccer balls
c. or a combination of both shoes or soccer balls.
This process described here is the process of Opportunity cost. Korea would then weigh their options and choose which is better for them either based on profit or any other reason.
Hence, Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.
