A British firm selling in the U.S. prices its product at $100. The initial exchange rate is 0.80 pounds per dollar. If the new exchange rate is 0.75 pounds per dollar, the revenue for the British firm from a single sale would drop by
A) 80 pounds.
B) 5 pounds.
C) 75 pounds.
D) 10 pounds.
E) 8 pounds.

Question

Quizplus · Accepted Answer

At the initial exchange rate of 0.80 pounds per dollar, $100 would convert to 100 * 0.80 = 80 pounds. At the new exchange rate of 0.75 pounds per dollar, $100 converts to 100 * 0.75 = 75 pounds. The difference in revenue from a single sale is 80 - 75 = 5 pounds.

A British Firm Selling in the U