so nobody knows the answer to 2 and 3?

The US dollar last year was 117 yen.

That means a $399 PS3 would yield Sony 46683 yen.

Today the US dollar gets 94 yen.

That means a $399 PS3 will yield 37506 yen.

So today, a PS3 gets 9177 yen or $97 less than a year ago simply from currency rate changes. Bottom line is they receive 25% less yen than a year ago selling at the same price in US dollars.

Depends on if you want to favour your consumers and businesses who import a lot (since they will benefit from a strong currency since it costs them less to import goods) or if you want to favour your manufacturing and export businesses. The latter benefit from a weak currency because much of their costs (labour) is not currency sensitive and their products are attractive to foreign countries because they don't cost as much to the foreigner.

So I'd say you want a strong currency, but not so strong that is affects your manufacturing sector by making their goods too expensive to exporters.

it can't get more easier than this explanation ^^

Who would have thought free economic classes on the boards

I hate to have two posts in a row, but I forgot this:

Ideally you want to keep your currency as stable as possible (which ties into an acceptable rate of inflation) that way people can feel safe when negotiating contracts in your currency without fear that they will be overpaying in the future.

If you can become a currency that is used as the standard currency in international contracts (like the US$ has been for decades and like the Euro is becoming) you currency will strengthen in time since so many contracts will involve one party having to buy US$ to meet their obligations.

Oh dear .. you do know the exchange rates are depent on interest rates, inflation rates, commodity prices, supply and demand ... etc etc etc?

You do know that artifically controlling your exchange rates may disagree with economic fundamentals?

I took IBF last sem ... can't remember a thing anymore

i... don't know any of these things lol.

that's why i'm asking. i'm an idiot when it comes to economy.

thank you, i really got it from this.

I remember seeing the answer to 2 some time ago, but can't recall the specific numbers. Hopefully someone can chime in.

As for 3, the companies don't often reveal the actual production costs, though sometimes they leak out.

We know the Wii has been sold for a profit from day 1, and likely would have been had it retailed for $200. It's cost is likely significantly less than that now.

The 360 costs have been dropping, and reportedly MS was making a profit off each sale, at least before the latest price cut. So I would guess a Core/Arcade system is running MS just under or just over $200 right now.

With the PS3, we know it originally cost over $800 to make, but those costs have been cut considerably, which is why the PS3 can now be sold for $400. My guess is that the PS3 is likely down to $450-500, and could be closer to $400 next year, which would allow Sony to cut price.