A UK manufacturer of electric bicycles imports battery cells from Sweden at a price fixed in Swedish kronor. It sells electric bicycles in Sweden at a price fixed in pounds. The manufacturer receives five shipments of battery cells in each month shown, fulfils all its export orders and makes no other sales. All other monthly costs remain unchanged.
Table 1 shows the manufacturer's trading information before and after a change in the exchange rate.
| Measure | Before the change | After the change |
|---|---|---|
| Exchange rate | 13.50 Swedish kronor per £1 | 15.00 Swedish kronor per £1 |
| Price of battery cells per shipment | 270,000 Swedish kronor | 270,000 Swedish kronor |
| Price of an electric bicycle | £1,800 | £1,800 |
| Monthly export orders | 1,500 bicycles | 1,300 bicycles |
| Other monthly costs | £1,100,000 | £1,100,000 |
Using the information in Table 1, analyse the likely change in the manufacturer's monthly profit after the exchange-rate movement.
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.