Question

Your firm makes toys in North America and distributes them to Asia.​ Asia's currency has an exchange rate higher than North America. This means that your firm has to decide whether to price the item from your home market or use the host currency to set the price. In order to remain marketable in the​ area, you decide to set the price using the host currency. This means your firm will receive​

a) More revenue in North American currency
b) More revenue in Asian currency
c) Less revenue in North American currency
d) Less revenue in Asian currency

Answer 1

When a firm prices its products using the host currency, it will receive more revenue in Asian currency.

Step-by-step explanation:

When a firm prices its products using the host currency, it means that the price is set in the currency of the country where the sales are happening. In this case, since your firm is selling toys in Asia, the price will be set in the Asian currency. As a result, your firm will receive more revenue in Asian currency. This is because the exchange rate is higher in Asia, meaning that the Asian currency is stronger compared to the North American currency.