In the exchange rate model in Example 7.2, we found that the optimal unit revenue, when converted
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In the exchange rate model in Example 7.2, we found that the optimal unit revenue, when converted to dollars, is $85.71. Now change the problem so that the company is selling in Japan, not the United Kingdom. Assume that the exchange rate is 0.00965 ($/¥) and that the constant in the demand function is 161,423,232,300, but everything else, including the elasticity of the demand function, remains the same. What is the optimal price in yen? What is the optimal unit revenue when converted to dollars? Is it still $85.71? Do you have an intuitive explanation for this?
Exchange RateThe value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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