11. Suppose that a monopolist faces an inverse demand curve, p(y)=1504y, and a cost function, c
(y)=10y+3y2. Then, the level of output that will maximize his profit is a. 3 b. 4 c. 10 d. 15 e. None
of the above.
11 Suppose that mangos are the only good produced and consu.pdf
1. 11. Suppose that mangos are the only good produced and consumed in the United States and
Brazil. In Brazil, a mango costs $$6.0. In the Unites States, mangos sell for $0.75 apiece. a.
According to the theory of Purchasing Power Parity, what is the equilibrium nominal exchange rate
between the U.S. dollar and the Brazilian Real (e(R$/$)) ? What would the real exchange rate
between the U.S. and Brazil be in that case? b. Suppose the price of mangos rises at a rate of 8%
per year in the U.S. and at a rate of 24% per year in Brazil. According to PPP, by how much (up or
down, and by what %) should we expect e(R$/$) to change each year? By how much should the
real exchange rate between the two countries change each year? c. Starting at the exchange rate
you calculated in (a), and assuming constant rates of inflation for both countries, what should the
nominal U.S dollar/Brazilian Real exchange rate be in 3 years, according to PPP?