In the exchange rate model in Example 7.2, we found that the optimal unit revenue, when converted to dollars, is $85.71. Now change the problem so that the company is selling in Japan, not the United Kingdom. Assume that the exchange rate is 0.00821 ($/¥) 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?
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