$$\begin{array} { | c | c | c | }
\hline \text { (1) } & \text { (2) } & \text { (3) } \
\hline \begin{array} { c }
\text { Quantity of Libras } \
\text { Demanded (Billions) }
\end{array} & \begin{array} { c }
\text { Dollar Price } \
\text { of Libras }
\end{array} & \begin{array} { c }
\text { Quantity of Libras } \
\text { Supplied (Billions) }
\end{array} \
\hline 100 & \$ 5 & 325 \
\hline 200 & 4 & 200 \
\hline 300 & 3 & 100 \
\hline 400 & 2 & 75 \
\hline
\end{array}$$ The table indicates the dollar price of libras, the currency used in the hypothetical nation of Libra. Assume that a system of ?exible exchange rates is in place. The equilibrium dollar price of libras is

Question

$$\begin{array} { | c | c | c | } 
\hline \text { (1) } & \text { (2) } & \text { (3) } \
\hline \begin{array} { c } 
\text { Quantity of Libras } \
\text { Demanded (Billions) }
\end{array} & \begin{array} { c } 
\text { Dollar Price } \
\text { of Libras }
\end{array} & \begin{array} { c } 
\text { Quantity of Libras } \
\text { Supplied (Billions) }
\end{array} \
\hline 100 & \$ 5 & 325 \
\hline 200 & 4 & 200 \
\hline 300 & 3 & 100 \
\hline 400 & 2 & 75 \
\hline
\end{array}$$ The table indicates the dollar price of libras, the currency used in the hypothetical nation of Libra. Assume that a system of ?exible exchange rates is in place. The equilibrium dollar price of libras is

Quizplus · Accepted Answer

The equilibrium price is where the quantity demanded equals the quantity supplied. In this table, at a price of $5, only 100 billion libras are demanded but 325 billion libras are supplied, resulting in a surplus. At a price of $2, 400 billion libras are demanded but only 75 billion libras are supplied, resulting in a shortage. Therefore, the equilibrium price must lie between $5 and $2.

Looking at the table, we can see that at a price of $4, both the quantity demanded and the quantity supplied are 200 billion libras, which shows a point of equilibrium. Therefore, the answer is B) $4.

The Table Indicates the Dollar Price of Libras, the Currency