Photo AI
Since his last shipment in April the exchange rate has changed to £1.00 = £1.50 - Edexcel - GCSE Business - Question 16 - 2018 - Paper 1
Question 16
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 t... 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 16 - 2018 - Paper 1
Step 1
What would be one effect on Georgio’s business of this change?
Answer
With the increase in the exchange rate to £1.00 = £1.50, it means that Georgio has to spend more pounds to import the same amount of cheese. This increase in the cost of imports will likely result in a reduced profit margin, as his costs rise while selling prices may not increase proportionately.
Therefore, the correct answer is: C: Able to charge lower prices. This may occur if he tries to maintain or increase demand despite higher costs.