A set of earphones sells for US$12.25 (American dollars) on amazon.com (the US-based retailer). The same set of earphones sells for CA$14.99 (Canadian dollars) on amazon.ca (the Canada based retailer). Both retailers offer free shipping to anywhere in North America.

a) If the exchange rate were 0.95 US$/CA$ (that is, 1 Canadian dollar buys 95 US cents), which retailer would the customers buy the earphones from? Show how you arrived at your conclusion.

b) If the Canadian dollar has depreciated and the exchange rate has become 0.55 US$/CA$ (that is, 1 Canadian dollar buys 55 US cents), which retailer would the customers buy the earphones from? Show how you arrived at your conclusion.

c) generalized what you learn from this exercise. Specifically, what happens to the Canadian imports and exports when the Canadian dollar depreciates andwhy?