Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 6, Problem 7E
To determine
To ascertain the effective price increases by J’s air lines for the purchase of a B.
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Suppose the current exchange rate is 115 yen per dollar. We currently have a demand for 50 units of our product when the unit price is 800 yen. The cost of producing and shipping the product to Japan is $6, and the current elasticity of demand is –2.5. Find the optimal price to charge for the product (in yen) for each of the following exchange rates: 60 yen/$, 80 yen/$, 100 yen/$, 120 yen/$, 140 yen/$, and 160 yen/$. Assume the demand function is linear.
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Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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