How would you respond in Problem 2 if the marginal cost of production were increasing? Why?
What will be an ideal response?
If the marginal cost of production is increasing, it costs more to produce larger quantities. After the real appreciation of the foreign currency, the monopolist would still want to increase the quantity sold in the foreign market, but not by as much. Hence, the foreign relative price would not fall as much. The monopolist would also increase the domestic relative price to sell less in that market, and he would shift some sales from the domestic market to the foreign market.
You might also like to view...
In the portfolio matrix, a__________is in a low-growth market, but the product has a dominant market share; it is an SBU that generates more money than it needs to maintain its market share
Fill in the blanks with correct word.
The risk selection process is primarily given to which insurance company department?
A) Administration B) Legal C) Marketing D) Underwriting