Question
Brazil and Peru sell coffee in the U.S. for $10 per pound. The Brazilian Real falls from 4:1 USD to 6:1 USD while the Peruvian
Brazil and Peru sell coffee in the U.S. for $10 per pound. The Brazilian Real falls from 4:1 USD to 6:1 USD while the Peruvian Sol stays at the same level of 3:1 USD. It cost 20 Reals per pound to get the coffee to the store shelf. You are the head of Brazil Coffee Co. When the currency falls from 4 Reals:1 USD to 6 Reals:1 USD, your market chief tells you that if you lower the price to $8 per pound, you could sell 50% more pounds of coffee. Should you follow the advice from marketing? Assume your costs per pound do not change. Please show calculations and how you got your answer!
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