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QUESTION 17 Assume Toyota has production facilities in both Japan and Mexico, while its competitor Honda has production facil

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Answer. Toyota is worse off, because its revenues go down.

Ex: Assume Toyota sells a car for PESO 90,000 in Mexico.

Exchange Rate YEN / PESO = 9 PESO

Sales in YEN = YEN 10,000

If Exchange rate of PESO weaken, YEN / PESO = 10 PESO

Sales in YEN = YEN 9,000

Hence, revenue has gone down.

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