The Figure Given Below Depicts the Foreign Exchange Market for British

question 46

Multiple Choice

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.
Figure 21.2

-Refer to Figure 21.2. An increase in the equilibrium quantity of British pounds from 300 to 350 would most likely mean that:

• A) the demand for British pounds has decreased.
• B) the supply of British pounds has decreased.
• C) increased demand for dollars has caused the dollar to depreciate and the pound to appreciate.
• D) increased demand for dollars has caused the dollar to appreciate and the pound to depreciate.
• E) the equilibrium exchange rate is $1.60 per British pound.

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Definitions:

Market Shares

The share of a market that a specific company holds, typically represented by the percentage of total market sales it accounts for.

Herfindahl Index

The Herfindahl Index is a measure of market concentration used to determine the intensity of competition within an industry, calculated by summing the squares of the market shares of all firms within the market.

Import Competition

The pressure on domestic companies from foreign producers offering goods or services in the same market.

Herfindahl Index

A measure of market concentration that squares and then sums the market share percentages of all firms within the industry.