You are the international marketing analyst for an US firm exporting fresh strawberries. You are requested

to provide sales and revenue estimates for 2021 given some important changes in your export markets.

	Fresh Strawberries Demand Elasticities
	Canada	Mexico
Own price elasticity	-1.5	-1.0
Income elasticity	2.0	2.0

a. Currently (2020) your company is selling annually 4,000 containers of fresh strawberries to Mexico and 5,000 to Canada. Your price/container is US $10,000 in each market..

b. You get important new information about your markets for 2021 that you need to incorporate in your projected sales and revenues: 1) Mexican per capita income is expected to increase by 5% with respect to 2020 and 2) The exchange rate between Canadian $ and US $ is expected to decrease from 1.0 (Canadian$/US$) to 0.80 (Canadian $/US$) in 2021 (that is a 20% decline). Assume no other changes are expected and that your price in US $ will not be changed. (Because of NAFTA/USMCA, no tariffs are paid for US strawberries in those countries).

You know by your previous research that fresh strawberries demand elasticities in your markets are as follows:

Hint: Use elasticities definitions to calculate changes in sales. You may not need all the elasticities provideda) What is the currently expected annual total revenue by country (2020)? (three points)

b) What are the projected sales (QUANTITY) by country in 2021? (using the new information). (SEVEN points)

c) What would be the total strawberry sales value US$) for both countries in 2021? (two points)