Importer usually face a foreign-exchange

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Reference no: EM138900

Q1. If the demand curve is Q(p) = 20-2p and the marginal cost is constant at 8, what is the profit maximizing monopoly price and output? What is the price elasticity and output? Interpret the latter.

Q2. Why does an importer usually face a foreign-exchange risk? How can the importer hedge the foreign-exchange risk by purchasing the foreign currency today to have it by the time the foreign-currency payment is due? Why does hedging usually take place with a forward contract?

Reference no: EM138900

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