A B C D

1 Madison pricing problem in a Japanese market

2
3 Unit cost ($) 50
4 Exchange rate ($/¥) 0.00965
5
6 Equivalent unit cost in yen 5181.347
7
8 Parameters of demand function in Japan market
9 Constant Elasticity
10 161423232300 -2.4
11
12 Pricing model (finding the right price in ¥ to maximize profit in $)
13 Price (¥) 8882.31
14 Demand (in Japan) 53.89
15 Profit ($) 1924.62
16
17 Equivalent price in dollars $85.71
18
19
20 This isis not
This not intuitive,
intuitive, but
but ititcan
can be
be shown
shown algebraically
algebraically
21 that the optimal price, shown in dollars, isisalways
that the optimal price, shown in dollars, always the
the
same, regardless
same, regardless ofof the
theexchange
exchange rate,
rate, ifif the
the
22 elasticity remains
remainsconstant.
constant.
elasticity
23
24