If Oranges Sell for $100 Per Crate in the United

question 47

Multiple Choice

If oranges sell for $100 per crate in the United States and 4000 pesos per crate in Mexico, the law of one price indicates that you should be able to exchange $1 for

• A)0.025 peso.
• B)4 pesos.
• C)40 pesos.
• D)400 pesos.

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Definitions:

Direct Materials Budget

A financial plan that estimates the raw materials required for production and the cost associated with these materials for a specific period.

Cash Payments

Outflows of cash to settle obligations or purchase goods and services.

Total Cost

The sum of all expenses incurred in producing a product or providing a service, including fixed and variable costs.

Credit Sales

Sales made on credit, where the buyer is allowed to pay the seller at a later date, as opposed to immediate payment transactions.