Following Teresa May's Brexit speech, the UK exchange rate in terms of euros depreciated from 1.13 to 1.08. If a firm sells 20000 units at 4 euros per unit, what is the difference in the firms revenue following the change in the exchange rate?

Total sales abroad: 20000 x 4 euros = 80000 euros Pound amount = Euro amount x ER Before ER change: 80000 x1.13 =90400 pounds After ER change: 80000 x 1.08= 86400 pounds 864-904 = -4000 pounds Therefore, revenues abroad have decreased by £4000 because of the depreciation in the ER! **You could also simply look at the depreciation of 0.05 x 80000 (total revenue) = £4000 for a quicker method!

JR
Answered by Josh R. Economics tutor

1953 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Explain why the demand for food is relatively price inelastic


Using examples, explain the difference between price elastic and inelastic.


How does the World Trade Organisation (WTO) benefit developing countries?


What is the difference between the short run and long run?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning