Illustrate what has happened to the value of the dollar

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Reference no: EM1358478

A U.S. company outsources its production to a plant in Mexico. the workers earn 60 pesos per hour. At that time the exchange rate was R = 15 pesos per dollar. suppose the exchange rate becomes R=10.

a) what has happened to the value of the dollar?

b) Illustrate what are the comapny's hourly labor costs in dollars at both exchange?

c) Holding all else constant, what happens to the company's profitability as a reuslt of the exchange rate change?

Reference no: EM1358478

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