MANAGERIAL ECONOMICS

ASSIGNMENT 4

AY 2020-2021

Questions/Exercises:

Directions: Answer briefly with maximum of 100 words only. Please avoid plagiarism.
(10pts each)

1. Define Foreign Exchange and its effect on the economy.

Foreign exchange is crucial for worldwide exchange. It is the exchanging of one

money for another in the unfamiliar trade market. It is the change of one money into another
at a particular rate. The conversion rates for practically all monetary standards are continually
coasting as the business sectors drives them. Foreign exchange straightforwardly impacts
worldwide exchange. Low trade rates support the travel industry and the fare economy. By
then, homegrown merchandise become more affordable for unfamiliar purchasers. Customers
at that point have really buying ability to spend on imported merchandise.

2. Explain the effect of a dollar depreciation on domestic firms and domestic

consumers for goods with less than 100%.

Dollar depreciation could benefit or harm domestic firms and domestic consumers as
it might cause expansion, higher development and expanded interest for trades. Exports
become more affordable, which causes the interest for it to develop quickly. Nevertheless,
imports become more costly, accordingly diminishing an extraordinary arrangement on the
requests for imports. Eventually, dollar devaluation could expand development rate for the
homegrown firms as higher fares and lower sends out builds total interest, which causes
higher total national output and expansion.

3. Some high-end retailers place their most expensive products right in the entryway of
the store, where consumers will see them first, and place their more popular, better-
selling items further back. Why?
 It is because these stores are attempting to outline the costs of the things in the back
as gains, as opposed to misfortunes, comparative with the things toward the front.
Furthermore, setting those items in the entrance will catch clients' consideration right away.
The most costly items will show up in clients' conversation in their day-by-day life, which
reminds them about the brand. However long their image is referenced and remembered, it is
an effective marking methodology. Note that, for very good quality brands, the most costly
items are typically signature form or restricted version, which urges their clients to recognize
the brand right away.