Despite the High Expenses Associated with Operating Elegant Stores and Purchasing

question 96

Multiple Choice

Despite the high expenses associated with operating elegant stores and purchasing advertising space in upscale magazines,the premium retail prices that luxury goods like Louis Vuitton command translate into handsome profits.The Louis Vuitton brand alone accounts for 60% of LVMH's operating profit.On the other hand,Louis Vuitton SA spends $10 million annually battling:

• A)EU regulations.
• B)counterfeiters in countries such as Turkey,South Korea,& Italy.
• C)competitors in European countries.
• D)suppliers of needed materials.
• E)export freight and taxes.

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Definitions:

Relative Prices

Relative prices refer to the price of one good or service compared to the price of another, essentially showing their cost relationship.

Japanese Goods

Products manufactured in Japan, known for their quality in various industries including electronics, automobiles, and machinery.

Yen Appreciates

This occurs when the value of the Japanese yen increases relative to other currencies in the foreign exchange market.

Dollar Appreciates

An increase in the value of the US dollar compared to other currencies, making imports cheaper and exports more expensive.