If the Exchange Rates, After Fees, in Tokyo Are ¥1

question 64

Multiple Choice

If the exchange rates, after fees, in Tokyo are ¥1 000 = €6 = $9 and the exchange rates in Paris are €1 = $1.5 = ¥171, which of the following would you expect to occur?

• A)a surge in conversion of euros to yen in Paris
• B)a surge in conversion of dollars to yen in Tokyo
• C)a surge in conversion of euros to dollars in Paris
• D)a surge in conversion of euros to yen in Tokyo

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Definitions:

Inelastic Demand

A market situation where the demand for a product does not significantly change in response to price changes.

Elastic Demand

A situation in the market where the desire for a product or service sharply varies with the adjustments in its cost.

Price Discrimination

The practice of charging different people or groups of people different prices that are not cost justified.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price to each customer based on their willingness to pay, capturing all consumer surplus as profit.