The Figure Given Below Depicts the Demand and Supply of Brazilian

question 93

Multiple Choice

The figure given below depicts the demand and supply of Brazilian reals in the foreign exchange market.Assume that the market operates under a flexible exchange rate regime. Figure 22.1 In the figure:
D₁ and D₂: Demand for Brazilian reals
S₁ and S₂: Supply of Brazilian reals
-Refer to Figure 22.1.If the initial equilibrium exchange rate is 6 pesos per real,then other things equal,a decrease in the number of Brazilian tourists to Mexico would:

• A)increase the demand for Brazilian reals from D₂ to D₁ and increase the exchange rate to 8 pesos per real.
• B)decrease the supply of Brazilian reals from S₁ to S₂ and increase the exchange rate to 8 pesos per real.
• C)decrease the supply of Brazilian reals from S₁ to S₂ and increase the exchange rate to 10 pesos per real.
• D)decrease the demand for Brazilian reals from D₁ to D₂ and increase the exchange rate to 8 pesos per real.
• E)decrease the supply of Brazilian reals from S₁ to S₂ and increase the demand for Brazilian reals from D₂ to D₁,thereby changing the exchanging rate to 10 pesos per real.

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Definitions:

Customary Pricing

A pricing strategy where the price is set based on what is traditionally expected or accepted by the market for a product or service.

Bundle Pricing

Bundle pricing is a marketing strategy where multiple products or services are packaged together and sold at a single price, often at a discount compared to purchasing each item individually.

Yield Management

A dynamic pricing strategy that involves adjusting prices based on demand to maximize revenue, often used in hospitality and airline industries.

Demand-Oriented

A pricing strategy where price is set based on the customer's demand for the product or service.