Question: 1 At times a major problem for Japanese consumer electronics manufacturers has been the appreciation of the yen against the U.S. dollar. This means that the yen is more expensive in terms of the U.S. dollar.

(A) Explain how the appreciation of the yen from Y150 to Y100 per US dollar affects the whole sale cost of supplying Japanese consumers electronics to the US.

(B) Suppose that the Japanese yen rises by one-third against the US dollar. Which of the following are plausible explanations of why the US retail price of the Japanese made DVD players will rise by less than one-third. (i) the wholesale cost of accounts for only part of retailers costs, (ii) American retail demand for Japanese made DVD players is inelastic, (iii) American retail supply of Japanese DVD players in inelastic?

(C) How would the appreciation of the yen affect the price and sales of Korean DVD players in the US?