A UK manufacturer of reusable laboratory coats sells some of its output abroad and buys fabric from overseas. The pound depreciates. The firm's other revenue and costs do not change during this period.
| Measure | Before the depreciation | After the depreciation |
|---|---|---|
| Revenue from exports | £1,800,000 | £2,050,000 |
| Cost of imported fabric | £1,100,000 | £1,450,000 |
Using the data, calculate the change in the firm's profit caused by the changes in its export revenue and its imported fabric costs.
Explain why a depreciation of the pound may not reduce the profit of every UK producer that sells abroad.
53 exam-style questions on OCR GCSE Economics 4.3 Exchange rates, covering 4.3.1 Draw how exchange rates are determined, 4.3.2 Analyse how exchange rates are determined, 4.3.3 Calculate currency conversion, 4.3.4 Analyse exchange rate data, and 4.3.5 Effect of exchange rate changes. Each one has a worked solution and a mark scheme showing where the marks go.