Plas-Tex Exporting (Scenario)
Plas-Tex Plastic Company manufactures plastic storage containers of all different sizes. Plas-Tex has been exporting more storage containers to Europe recently because of the depreciation of the U.S. dollar relative to the euro. Plas-Tex CEO, Wayne Chisholm, has prepared a report for the annual shareholders meeting in which he outlines his manufacturing and sales recommendations for the upcoming year.
-Which of the following supports maintaining the current production status instead of increasing production?
A) The euro/dollar exchange rate is unpredictable due to its constant fluctuation.
B) Exporters and importers typically profit from currency speculation.
C) The euro/dollar exchange rate usually remains steady for long periods of time.
D) The cost of living in the U.S. has risen dramatically in the last year.

Question

Quizplus · Accepted Answer

The unpredictability of the euro/dollar exchange rate supports maintaining the current production status instead of increasing production, as it introduces a risk factor that could affect the profitability of exporting more storage containers to Europe.

Plas-Tex Exporting (Scenario) Plas-Tex Plastic Company Manufactures Plastic Storage Containers of All Different