The Price of a Computer in the United States Is

question 274

Essay

The price of a computer in the United States is $1,000. The price of a car in Germany is 10,000 euros. The current exchange rate is 0.9 euros per dollar.
a) If a computer is exported from the United States to Germany with no barriers to trade, what will be the price computer in Germany?
b) If a car is imported to the United States from Germany with no barriers to trade, what will be the price of the the United States?
c) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a computer exported fro United States change in Germany?
d) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a car imported to the Un States from Germany change in the United States?

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Definitions:

Accounting Period

A specific period of time used for financial reporting, typically a quarter or year, used to calculate financial performance.

Variable Overhead Spending Variance

The difference between the actual variable overhead costs incurred and the expected (or budgeted) costs, based on the actual level of production activity.

Standard Costing System

A costing method that assigns expected costs to products to assess performance by comparing these costs with the actual costs incurred.

Direct Labour Hours

The total hours worked by employees to manufacture a product, directly involved in the production process and often used to allocate manufacturing overhead.