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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 Giorgio’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 Giorgio’s business of this change, assuming he imports the same amount of cheese each month?
Answer
With the change in exchange rate, Giorgio will be able to charge lower prices for the cheese he imports. Since the value of the Euro has increased compared to the Pound, the cost of importing cheese in Pounds will be affected. If he maintains the same selling price in Euros, he translates that into a lower price in Pounds, allowing him to potentially attract more customers while maintaining his profit margins.