Justify a firm that produces a differentiated product

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Question 1). A firm that produces a differentiated product and competes with internationally diversified competitors will face a relatively low price elasticity of demand for its products and will possess a relatively high degree of price flexibility. Is this a correct statement? Justify your answer.

Question 2) Following a devaluation of the Greek drachma, IBM's mainframe computers, whose only competition comes from other US computer companies, will suffer a drastic price increase. Is this a correct statement? Justify your answer.

Question 3) Faced with an appreciation of the yen, Toyota should consider investing in US production facilities, increasing its investment in research and development and coming out with new cars aimed at the lower end of the market. Is this a correct statement? Justify your answer.

Question 4) A US exporter anticipating an appreciation of the dollar should explore possible production sites abroad. Is this a correct statement? Justify your answer.

Reference no: EM133340887

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