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GroupCase1

# GroupCase1 - BUSI 620 Group Case 1 Group Case 1 1 Chapter 4...

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BUSI 620 Group Case 1 Group Case 1 1. Chapter 4: problem 11*. * Hint: 11(a), the 4% increase in the price of TV sets in Japan and the 5% depreciation of the dollar lead t a total increase of 9% in the dollar price of imported TV sets in the U.S., from \$300 to \$327. (b) “… the change in price only?” The price refers to the import price. Correction: 11(4) the price elasticity of demand for imported TV sets in the United States is – 1.5, not 1.5. (a)* If the price of the imported TV set was \$300 in the United States at the beginning of the year, approximately how much would you expect the price of the same imported TV set to be in the United States at the end of the year? The US price of TV set will be influenced by both changes in TV set price in Japan abd dollar yen currency exchange rate change. Change in TV set price due to price change in Japan = 4% Change in TV set price due to depreciation in US\$ against Japanese Yen=5% Total increase in price = 4%+5%=9% Price of TV set in US at the end of the year = 300*(1+9%)=US\$ 327

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