Suppose Mexico is a major export market for your U.S.-based company and the Mexican peso appreciates drastically against the U.S. dollar. This means
A)your company's products can be priced out of the Mexican market, as the peso price of American imports will rise following the peso's fall.
B)your firm will be able to charge more in dollar terms while keeping peso prices stable.
C)your domestic competitors will enjoy a period of facing lessened price competition from Mexican imports.
D)both b and c are correct

Question

Quizplus · Accepted Answer

If the Mexican peso appreciates against the U.S. dollar, it means that the U.S. dollar is weaker relative to the Mexican peso. In this situation, Option B is correct because the company will be able to charge more in dollar terms while keeping peso prices stable. Additionally, Option C is also correct because the domestic competitors will face lessened price competition from Mexican imports. Therefore, both options b and c are correct. Option A is not correct, as the appreciation of the peso does not necessarily mean that American imports will be priced out of the Mexican market.

Suppose Mexico Is a Major Export Market for Your U