A U.S. wine merchant travelling in France has found a French wine of the same quality as a U.S. wine they regularly sell. She assumes
A U.S. wine merchant travelling in France has found a French wine of the same quality as a U.S. wine they regularly sell. She assumes that the real exchange rate should be 1 case of U.S. wine equals one case of French wine. The French wine merchant will sell her a case of the French wine for 350 euros. She knows that a case of the equivalent U.S. wine sells for $400. The euro is selling in France for $1.20. Assuming transportation costs are $40 per case of either wine, which of the following statements is true? O A. The U.S. wine merchant should buy the U.S. wine and sell it in France and make a profit. O B. The U.S. wine merchant should buy the French wine and sell it in the U.S. and make a profit. O C. There is no profit in the deal. O D. None of the above
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