If the British Subsidiary of a European Firm Has Net

question 25

Multiple Choice

If the British subsidiary of a European firm has net exposed assets of £250,000, and the pound increases in value from 1.40/£ to €1.45/£, the European firm has a translation ________.

• A)gain of €25,000
• B)loss of €25,000
• C)gain of £25,000
• D)loss of £25,000

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Definitions:

Economic Profits

The variance between complete earnings and aggregate expenses, taking into account both overt and covert costs.

Downward-Sloping Demand

A market scenario where the quantity demanded by consumers decreases as the price of the good increases, illustrating the inverse relationship between price and demand.

Downward Sloping

Describes a line or curve on a graph that represents a decrease or decline in value as one moves from left to right.

Perfectly Competitive Firm

A perfectly competitive firm operates in a market where no single company can influence the price of its product, characterized by many sellers, homogeneous products, and free market entry and exit.