Question
Suppose a smartphone is sold for 500 US dollars in the USA and 750 real in Brazil. The market exchange rate is 2.4 real/US dollars
Suppose a smartphone is sold for 500 US dollars in the USA and 750 real in Brazil. The market exchange rate is 2.4 real/US dollars and there is a 5 US dollar shipping cost from the USA to Brazil.
Is it profitable for buyers to import from the USA to Brazil?
What happens if the expected exchange rate of the Brazilian real to the US dollar declines by 10 per cent? Will the buyer choose to import smartphones?
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Econometric Analysis Of Cross Section And Panel Data
Authors: Jeffrey M Wooldridge, J M Wooldridge
2nd Edition
0262232588, 9780262232586
