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Recalculate the income statement shown in case Exhibit 1 using the post-Brexit exchange rate of 1.00 = ?1.16,assuming thatthe U.K. subsidiary increases its price to
Recalculate the income statement shown in case Exhibit 1 using the post-Brexit exchange rate of 1.00 = ?1.16,assuming thatthe U.K. subsidiary increases its price to U.K. buyers to 235 per unit. Assume that fixed costs remain fixed and variable costs vary proportionally to volume or quantity sold. Assume that U.K. purchasers' consumer behaviour is somewhatelasticand that market research suggests their elasticity = 1.1. Using the simple price elasticity formula (see p. 3 of this teaching note), calculate profit in both pounds and euros.
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