Imports

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First found May 22, 2018

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English
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Transcript

Sam wants to download some music from the Internet. He has
spent a long time researching and has found three companies
who seem to offer the best deals. One is based in the UK, one in
the USA and one in Germany.
These are the prices they are charging for registration:
◦ Tunes unlimited [UK company] - £30
◦ EZiest download [USA company] - $50
◦ Musikwik [German company] - €50
He found out that the exchange rates were:
£1 = $1.85
£1 = €1.45
Which would be the best deal for Sam?
Sam wants to download some music from the Internet. He has
spent a long time researching and has found three companies who
seem to offer the best deals. One is based in the UK, one in the
USA and one in Germany. These are the prices they are charging
for registration:
Tunes unlimited [UK company] - £30
EZiest download [USA company] - $50 = 50/1.85 = £27.03
Musikwik [German company] - €50
He found out that the exchange rates were:
£1 = $1.85
£1 = €1.45
Which would be the best deal for Sam?
Sam wants to download some music from the Internet. He has
spent a long time researching and has found three companies
who seem to offer the best deals. One is based in the UK, one in
the USA and one in Germany. These are the prices they are
charging for registration:
Tunes unlimited [UK company] - £30
EZiest download [USA company] - $50 = 50/1.85 = £27.03
Musikwik [German company] - €50 = 50/1.45 = £34.48
He found out that the exchange rates were:
£1 = $1.85
£1 = €1.45
Which would be the best deal for Sam?
Sam wants to download some music from the Internet. He has
spent a long time researching and has found three companies
who seem to offer the best deals. One is based in the UK, one in
the USA and one in Germany. These are the prices they are
charging for registration:
Tunes unlimited [UK company] - £30
EZiest download [USA company] - $50 = 50/1.85 = £27.03
Musikwik [German company] - €50 = 50/1.45 = £34.48
He found out that the exchange rates were:
£1 = $1.85
£1 = €1.45
Which would be the best deal for Sam?
A business sells exercise equipment to
companies in a variety of different
countries. Its cycling machine has a
price in the UK of £250. How much the
equipment would sell for in the
following countries:






United States
Germany
Turkey
Australia
Japan
Canada
£1 =
US Dollar
1.97
Euro
1.52
Turkish Lira
2.76
Australian Dollar 2.54
Japanese Yen
239
Canadian Dollar 2.33
Remember Rule

To change pounds into another currency,
multiply by the rate. E.g. at £1 = €1.48, £50
changed into Euro would be 50 x 1.48 = €74.
A business sells exercise equipment to
companies in a variety of different
countries. Its cycling machine has a price
in the UK of £250. How much the
equipment would sell for in the following
countries:






United States = $492.50
Germany = €380
Turkey = 690 Lira
Australia = AUS$635
Japan = 59750 Yen
Canada = Can$582.50
£1 =
US Dollar
1.97
Euro
1.52
Turkish Lira
2.76
Australian Dollar 2.54
Japanese Yen
239
Canadian Dollar 2.33
£1 =
Danish Kroner
Mexican Peso
Indian Rupees
Taiwan Dollars
The same business buys in a
number of parts for its exercise
bicycle from different countries.
Use the currency tables to
calculate how much it will have to
pay for the parts if they are priced
in the home country as follows:




Denmark - Kr150
Mexico - Peso 500
India - Rupees 750
Taiwan - Taiwan Dollars 690
11.30
21.52585
86.47
64.84
Remember Rule

To change a foreign currency back into
pound, divide the sum by the rate. E.g. to
change €90 into pounds, divide 90 by 1.48 =
£60.81
The same business buys in a
number of parts for its exercise
bicycle from different countries.
Use the currency tables to
calculate how much it will have to
pay for the parts if they are priced
in the home country as follows:




Denmark - £13.27
Mexico - £23.23
India - £8.67
Taiwan - £10.64
£1 =
Danish Kroner
Mexican Peso
Indian Rupees
Taiwan Dollars
11.30
21.52585
86.47
64.84
If the value of the £ Increases,
Imports are cheaper, therefore
Exports are more expensive.
So the opposite is then true;
If the value of the £ decreases,
Imports are more expensive, therefore
Exports are cheaper.
Mini Plenary -- Sports Shop Imports
Trainers cost you €30 and you want to sell them for £40
Exchange Rate
May
£1 = €1.47
June
£1 = €1.39
July
£1 = €1.43
Total cost of 200
trainers [in £]
More expensive or
cheaper than in the
previous month?
Mini Plenary -- Sports Shop Imports
Trainers cost you €30 and you want to sell them for £40
Exchange Rate
May
£1 = €1.47
June
£1 = €1.39
July
£1 = €1.43
Total cost of 200
trainers [in £]
£4082
More expensive or
cheaper than in the
previous month?
Mini Plenary -- Sports Shop Imports
Trainers cost you €30
Exchange Rate
Total cost of 200
trainers [in £]
May
£1 = €1.47
£4082
June
£1 = €1.39
£4317
July
£1 = €1.43
More expensive or
cheaper than in the
previous month?
More expensive
Mini Plenary -- Sports Shop Imports
Trainers cost you €30
Exchange Rate
Total cost of 200
trainers [in £]
More expensive or
cheaper than in the
previous month?
May
£1 = €1.47
£4082
June
£1 = €1.39
£4317
More expensive
July
£1 = €1.43
£4196
Cheaper
A UK fruit wholesaler buys bananas from a supplier in
Honduras. The Honduran seller wants to be paid in US
dollars. A bunch of ten bananas is currently selling for $20
each. The exchange rate is currently £1 = $1.75.
Q1.
How much does the UK buyer have to pay, in pounds,
for each bunch of bananas?
◦ The exchange rate between the pound and the dollar changes.
The pound has appreciated against the dollar and is now standing
at £1 = $1.80.
Q2.
How much will a bunch of bananas now cost the UK
importer?
Q3.
Given your answer to the question above, what do
you think might be the effect on the UK importer of the
change in the exchange rate?
A UK fruit wholesaler buys bananas from a supplier in
Honduras. The Honduran seller wants to be paid in US
dollars. A bunch of ten bananas is currently selling for
$20 each. The exchange rate is currently £1 = $1.75.
Q1.
How much does the UK buyer have to pay, in
pounds, for each bunch of bananas? £11.43
◦ The exchange rate between the pound and the dollar changes.
The pound has appreciated against the dollar and is now
standing at £1 = $1.80.
Q2.
How much will a bunch of bananas now cost the UK
importer? £11.11
Q3.
Given your answer to the question above, what do
you think might be the effect on the UK importer of the
change in the exchange rate?
 Stronger £ reduces costs for the importer
If the value of the £ Increases,
Imports are cheaper, therefore
Exports are more expensive.
So the opposite is then true;
If the value of the £ decreases,
Imports are more expensive, therefore
Exports are cheaper.
 Explain
in detail the meaning of
import and export and why is it
affected by exchange rates
(5 Marks)
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