The Price of a Computer in the United States Is

question 91

Essay

The price of a computer in the United States is $1,000. The price of a car in Germany is 10,000 euros. The current exchange rate is 0.9 euros per dollar.
a) If a computer is exported from the United States to Germany with no barriers to trade, what will be the price of the computer in Germany?
b) If a car is imported to the United States from Germany with no barriers to trade, what will be the price of the car in the United States?
c) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a computer exported from the United States change in Germany?
d) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a car imported to the United States from Germany change in the United States?

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Definitions:

IV × PV Design

A factorial experimental design involving an independent variable (IV) and a participant variable (PV), used to examine their interaction effects.

Participant Variable

A characteristic or attribute of the individuals participating in a study that can affect its outcome.

Manipulated Variable

The variable in an experiment that is systematically altered by the researcher to observe its effect on a dependent variable.

IV × PV Factorial

A factorial design involving an independent variable (IV) and a participant variable (PV), typically used to examine their interactive effects on a dependent variable.