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Qp4 I need help with solving with explanation. Answer is 2100;2700 according to text.

A US company has costs of $150 per unit of product, which is exported to Mexico. The US exchange rate appreciates from $1 US buys 14 Pesos, to $1 US buys 18 Pesos. To cover costs, the US exporter must change her price from ____ to ____ Pesos.

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Answer : The answer is 2100; 2700.

When exchange rate is, $1 = 14 pesos then US company's cost $150 is equal to (150 * 14) = 2100 pesos.

When exchange rate is, $1 = 18 pesos then US company's cost $150 is equal to (150 * 18) = 2700 pesos.

As US company exports the product to Mexico hence to cover the cost the US exporter should change the price level from 2100 pesos to 2700 pesos.

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