3.) Suppose there are two Italian companies ('A' and 'B') that sell all of their output...

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3.) Suppose there are two Italian companies ('A' and 'B') that sell all of their output in the US for US dollars. Both sell the same number of units, charge the same prices, and so have the same US dollar revenue. Costs are paid in the currency of the country where production takes place (USD in the US, euros (EUR) in Italy). Their production is divided between the US and Italy as shown in the following table: Company A Company B Italian Production US Production (% of total) (% of total) 100% 50% 0% 50% a.) If the Euro (EUR) exchange rate moves from EUR 1 = USD 1.05 to EUR 1 = USD 1.12, will the (Euro denominated) revenues of the two companies go up or down? (Assume that neither changes the US dollar price it charges for its product or the number of units it sells.) Explain your reasoning. b.) Which company's (Euro denominated) profits will change the most as a result of the exchange rate change? Explain your reasoning. (Assume that neither changes the US dollar price it charges for its product or the number of units it sells.) 3.) Suppose there are two Italian companies ('A' and 'B') that sell all of their output in the US for US dollars. Both sell the same number of units, charge the same prices, and so have the same US dollar revenue. Costs are paid in the currency of the country where production takes place (USD in the US, euros (EUR) in Italy). Their production is divided between the US and Italy as shown in the following table: Company A Company B Italian Production US Production (% of total) (% of total) 100% 50% 0% 50% a.) If the Euro (EUR) exchange rate moves from EUR 1 = USD 1.05 to EUR 1 = USD 1.12, will the (Euro denominated) revenues of the two companies go up or down? (Assume that neither changes the US dollar price it charges for its product or the number of units it sells.) Explain your reasoning. b.) Which company's (Euro denominated) profits will change the most as a result of the exchange rate change? Explain your reasoning. (Assume that neither changes the US dollar price it charges for its product or the number of units it sells.)