Your US-Based Company Is Selling Parts to a Company in Chile

question 56

Multiple Choice

Your U.S.-based company is selling parts to a company in Chile and the company will pay you US$10,000 in 3 months. The current exchange rate is 490 pesos/US$. If the exchange rate at the time of payment is 510 pesos/US$

• A)you earn additional profit.
• B)the Chilean company will end up paying more for the goods.
• C)the Chilean company will end up paying less for the goods.
• D)you earn less profit.

---

Definitions:

Equilibrium Level

A condition in which the supply and demand in the market are equal, leading to stable prices.

Deadweight Loss

Deadweight loss is the loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved in a market.

Price Floor

A minimum price set by the government for certain goods and services, below which they cannot be sold, aimed at protecting producers.

Government Purchases

Expenditures made by the government for goods and services that affect the economy, including investments and spending on infrastructure, healthcare, and education.