Recently the British Pound Suffered an Unexpected Depreciation in Value

question 23

Multiple Choice

Recently the British Pound suffered an unexpected depreciation in value. Which of the following actions being considered by Coventry Furniture of London, a purely domestic furniture manufacturer and retailer, would be considered a highly unlikely response to the depreciation of the pound?

• A) Coventry might choose to maintain its domestic sales prices constant in pound terms.
• B) Coventry might try to raise domestic prices because competing imports are now priced higher in England.
• C) Coventry might try to lower domestic prices because competing imports are now priced higher in England.
• D) none of the above

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Definitions:

Rent Control

Government policies or laws that limit the amount landlords can charge for leasing residential properties in order to keep housing affordable.

High Demand

A market condition where the desire and need for a product or service significantly exceed the available supply.

Bundle

A set of goods or services sold together as a single combined unit.

Vertical Contracts

agreements between companies at different levels of the supply chain, such as between a manufacturer and a retailer.