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Since his last shipment in April the exchange rate has changed to £1.00 = €1.50 - Edexcel - GCSE Business - Question 17 - 2018 - Paper 1
Question 17
Since his last shipment in April the exchange rate has changed to £1.00 = €1.50. What would be one effect on Georgio’s business of this change, assuming he imports ... show full transcript
Worked Solution & Example Answer:Since his last shipment in April the exchange rate has changed to £1.00 = €1.50 - Edexcel - GCSE Business - Question 17 - 2018 - Paper 1
Step 1
What would be one effect on Georgio’s business of this change, assuming he imports the same amount of cheese each month?
Answer
The change in the exchange rate, where £1.00 is now equivalent to €1.50, implies that Georgio will need to pay more euros for the same amount of cheese he imported previously. This increase in cost can lead to:
Answer:
C Able to charge lower prices
This is because if he maintains the same pricing in pounds despite higher costs in euros, his margin will decrease. However, if he lowers his prices to remain competitive in the market, he can potentially still attract customers, although it could affect his profit margins.