A UK outdoor equipment shop buys tents from a supplier in Sweden and sells them to customers in the UK. The supplier charges the same price in Swedish kronor throughout. Over the period shown in Table 1, the value of the pound rises against the Swedish krona.
| Measure | Before the rise | After the rise |
|---|---|---|
| Exchange rate | 12.00 Swedish kronor per £1 | 13.50 Swedish kronor per £1 |
| Shop's purchase cost per tent | £90.00 | £80.00 |
| UK price charged per tent | £145.00 | £138.00 |
| Tents sold each week | 400 | 470 |
Analyse how the change in the exchange rate is likely to have affected the shop. Use the information in Table 1 in your answer.
118 exam-style questions on AQA GCSE Economics 2.4 International trade and the global economy, covering 2.4.1a The importance of trade, 2.4.1b Advantages of trade and interdependence, 2.4.1c UK exports and imports, 2.4.2a How exchange rates are determined, 2.4.2b Effects of exchange rate changes, 2.4.3a Free-trade and its arguments, 2.4.3b Free-trade agreements such as the EU, 2.4.4a Features and growth of globalisation, 2.4.4b Benefits and drawbacks of globalisation, and 2.4.4c Moral, ethical and sustainability considerations. Each one has a worked solution and a mark scheme showing where the marks go.