Business Studies Multiple Choice Question – 15 June 2019

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

LucyArts Ltd is a UK business that imports art supplies kits from the USA. On average it imports approximately 2,000 art supplies kit each month.

Each kit costs $3.

Last year the exchange rate between the British pound and the US dollar was £1 = $1.77, and this year it is £1 = $1.55.

Identify ONE effect on LucyArts Ltd of this change in the exchange rate.

Select ONE answer:

  1. Lower profit on each sale if the UK price does not change
  2. Lower variable costs of art supplies kits from the USA
  3. Increased imports of art supplies kits from the USA
  4. Increased demand for its art supplies kits in the UK

 

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 1

  1. Correct – items become dearer for the UK if the exchange becomes lower.
  2. variable costs does not affect the sale of art kits.
  3. if increased importing could reduce the cost but would not be affected by the exchange rate.
  4. demand does not affect the exchange rate.

 

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