How can currency valuation issues provide firms with the real option of altering inputs?

Question

Quizplus · Accepted Answer

When a firm has production facilities in multiple countries, it can shift production to countries with weaker currencies, making inputs cheaper and reducing production costs. This provides the real option of altering inputs in response to currency valuation issues. Options A and B may be riskier strategies, and option C may not always be feasible depending on the nature of the inputs and locations involved.

How Can Currency Valuation Issues Provide Firms with the Real