FINC6013 FINC6013 Workshop 国际贸易代写

FINC6013 Workshop

FINC6013 As the vice president of finance for a U.S. firm, what do you say to your production manager when he states, “We shouldn’t let

As the vice president of finance for a U.S. firm, what do you say to your production manager when he states, “We shouldn’t let foreign exchange risk interfere with our profitability. Let’s simply invoice all our foreign customers in dollars and be done with it.”

Why does a monopolist not charge the same price for the same good in two different countries?

If there is 10% inflation in Brazil, 15% inflation in Argentina. And the Argentine peso weakens by 21% relative to the Brazilian real. By how much has the peso strengthened or weakened in real terms. What effect do you expect that this change in the real exchange rate would have on trade between the two countries?

Suppose that you have one domestic production facility that supplies both the domestic and foreign markets. Assume that the demand for your product in the domestic market is Q = 2,000 – 3P and in the foreign market, demand is given by Q* = 2,000 – 2P*. Assume that your domestic marginal cost of production is 600. If the initial real exchange rate is 1, what are your optimal prices and quantities sold in the two markets? By how much will you change the relative prices of your product if the foreign currency appreciates in real terms by 10%? What will you do to production?

How would you respond in Problem 2 if the marginal cost of production were increasing? Why?

Suppose you are a monopolist who faces a domestic demand curve given by Q = 1,000 – 2P. Your domestic cost of production involves domestic costs per unit of 300 and a foreign cost per unit produced of 150. If the real exchange rate is 1.1. What would be the price you would charge and the quantity you would sell? How do these variables change when the real exchange rate increases by 10%?

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