Business Studies Multiple Choice Question – 15 March 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Business Studies

Pete has a South African restaurant in the centre of Stafford. To ensure that his meals are as authentic as possible he imports some of the ingredients from Cape Town. The exchange rate between the pound (£) and the Dollar($) is very important to Pete. He buys 500 kg of Biltong from Cape Town every month. The Biltong costs $10 per kg.

Since his last shipment in February, the exchange rate has changed to £1.00 = $1.50 from £1 = $1.40

What would be one effect on Pete’s business of this change, assuming he imports the same amount of Biltong each month?

Select ONE answer:

  1. Lower profit
  2. Cash flow deteriorates
  3. Able to charge lower prices
  4. Higher variable costs

 

Show the workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Business Studies KS4 & KS3 classes

The answer is 3:

  1. Lower profit – is not correct because variable costs in £s would decrease therefore profit increases.
  2. Cash flow deteriorates – is not correct because variable costs in £s would decrease therefore cash flow would improve.
  3. Able to charge lower prices – is correct because variable costs in £s are lower allowing lower prices to be charged.
  4. Higher variable costs – is not correct because variable costs would be lower.

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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