To understand how a Japanese producer would need to adjust the price of a good sold in the U.S. between 1980 and 2007, let’s break down the exchange rates and the implications for pricing.
In 1980, the exchange rate was about 0.0045 dollars per yen. This means that one yen was worth 0.0045 dollars. To find out how many yen make a dollar, you can take the reciprocal of this rate, which is approximately 222.22 yen per dollar.
Fast forward to 2007, when the exchange rate was about 121 yen per dollar. This was a significant change, indicating that the yen appreciated against the dollar over this period. To maintain the same dollar price for a good sold in the U.S., a Japanese producer would have to account for this change in exchange rates.
For example, if the Japanese producer initially priced a product at 10,000 yen in 1980, that would translate to approximately $45 (10,000 yen * 0.0045). By 2007, to maintain that same value of $45, the producer would need to charge approximately 5,445 yen (calculated as $45 * 121 yen). This shows that the dollar price needed to increase significantly to keep the same value in yen. Essentially, the fluctuation in the exchange rate would require adjustments to ensure pricing remains consistent when converted to dollars.
In conclusion, as the yen appreciates against the dollar over time, a Japanese producer must increase the yen price of goods sold in the U.S. to maintain the same dollar price, reflecting economic factors and currency strength.