Question

Table 2 USA 40000 Japan 3000 10'000 Demand for imports (before S-devaluation) Demand for imports (uitter S-devaluation) Price of imports, in foreign currency (before S-devaluation) 5000 Yen 5'000 $1000 Suppose the US Dollar S is devalued its value against the Yen goes from Yen=51/100 to Yen=$1/50. What is the elasticity of imports in the USA? QUESTION 14 Table 2 USA Japan 40 000 8000 10000 Demand for imports for develation Demand for importster S alation) Price of imports, in foreign currency here aluation) e the US wi l d Yon 5000 511000 S B the Yon goes from Yon 1/100 to Yo-51/50. What is the sick of imports in the Japan

Answer 1

Question 13)As the exchange rate of yen has appreciated by 100% , the price of imports would also increase to its double, that is, it would be Yen 10000

Elasticity of imports of USA = Percentage change in the quantity demanded in imports/ percentage change in the price level.

= ((35000/40000)*100) / (((10000-5000)/5000)*100)

= 0.875

Question 14)As the value of Yen has appreciated and has become twice, the cost of imports will be reduced to half, that is, $2500.

Elasticity of imports in Japan = ((10000-8000)/8000) / ((5000-2500)/5000)

= 0.25 / 0.5

= 0.5