Figure 14.1US market for Imported Toyotas

-In Figure 14.1,D represents the US demand curve for Toyotas and MC0 represents the marginal cost of producing Toyotas.Assume that Toyota behaves like a monopolist in the US market.A shift in the marginal cost curve from MC0 to MC1 leads to
A) a complete pass-through ot the depreciation of the dollar
B) a complete pass-through of the appreciation of the dollar
C) a partial pass-through of the depreciation of the dollar
D) a partial pass-through of the appreciation of the dollar

Question

Figure 14.1US market for Imported Toyotas
 
-In Figure 14.1,D represents the US demand curve for Toyotas and MC0 represents the marginal cost of producing Toyotas.Assume that Toyota behaves like a monopolist in the US market.A shift in the marginal cost curve from MC0 to MC1 leads to
A) a complete pass-through ot the depreciation of the dollar 
B) a complete pass-through of the appreciation of the dollar 
C) a partial pass-through of the depreciation of the dollar 
D) a partial pass-through of the appreciation of the dollar

Quizplus · Accepted Answer

A shift in the marginal cost curve from MC0 to MC1 indicates an increase in production costs, which could be due to the appreciation of the dollar. As a monopolist, Toyota may not fully pass on the increased costs to consumers, resulting in a partial pass-through.

Figure 14.1US Market for Imported Toyotas