If the Dollar Buys Fewer Bananas in Guatemala Than in Honduras,then

question 32

Multiple Choice

If the dollar buys fewer bananas in Guatemala than in Honduras,then traders could make a profit by

• A)buying bananas in Honduras and selling them in Guatemala,which would tend to raise the price of bananas in Honduras.
• B)buying bananas in Honduras and selling them in Guatemala,which would tend to raise the price of bananas in Guatemala.
• C)buying bananas in Guatemala and selling them in Honduras,which would tend to raise the price of bananas in Guatemala.
• D)buying bananas in Guatemala and selling them in Honduras,which would tend to raise the price of bananas in Honduras.

---

Definitions:

Economies of Scale

A cost advantage that arises with increased output of a product, where fixed costs are spread out over more units of production, reducing the cost per unit.

Inventory Carrying Costs

Inventory carrying costs include the total expenses associated with holding and storing unsold goods, such as warehousing, insurance, depreciation, and opportunity costs.

Disintermediation

Elimination of intermediaries, such as distribution centers, in the delivery of products from a producer to a consumer.

Distribution Centers

Facilities that store and distribute a company's inventory to retail locations or directly to customers.