consider a firm with a plant in the U.S. and the U.K. A UK- based shipper chargers £2.75 per unit to ship between the two countries. Assume no taxes, and consider the following data. USUKWeekly Demand12,00013,000Weekly Capacity17,00022,000Sales Price$40.00£50.00Production Cost$28.30£25.92a. Suppose that the exchange rate is .81=$1.00. What is the best production and distribution plan, i.e., how much should be made in each country, and how much should be shippe dbetween countries?b. given your plan in part a, what is the profit in each country (expressed in dollars)?

A firm with a plant in the U.S. and U.K. A UK- based shipper chargers £2.75= $3.4 (as 1 £ = $1/0.81)…

Answered: consider a firm with a plant in the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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consider a firm with a plant in the U.S. and the U.K. A UK- based shipper chargers £2.75 per unit to ship between the two countries. Assume no taxes, and consider the following data.

	US	UK
Weekly Demand	12,000	13,000
Weekly Capacity	17,000	22,000
Sales Price	$40.00	£50.00
Production Cost	$28.30	£25.92

a. Suppose that the exchange rate is .81=$1.00. What is the best production and distribution plan, i.e., how much should be made in each country, and how much should be shippe dbetween countries?

b. given your plan in part a, what is the profit in each country (expressed in dollars)?

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