Of the businesses or individuals in the list below, who would benefit most from a weak U.S. dollar?
• A family from France planning to vacation in the U.S.
• A Japanese company that makes electronics to sell in the U.S.
• An American factory that makes microchips and sells them in Asia
• A Mexican resort that mostly caters to American guests
• A Brazilian company that makes clothing to sell in the U.S.
The Brazilian clothing company and the American student
The French family and the American microchip factory
The Mexican resort and the Brazilian clothing company***
The Japanese electronics company and the French family
This might help with questions about a strong or weak dollar:
http://www.infoplease.com/cig/economics/dollar-us-economy.html
The business or individual that would benefit most from a weak U.S. dollar is the Mexican resort that mostly caters to American guests. Here's an explanation of why:
When the U.S. dollar weakens, it means that it loses value compared to other currencies, such as the Mexican peso. This makes goods and services priced in U.S. dollars relatively cheaper for foreigners.
In this case, the Mexican resort primarily caters to American guests. If the U.S. dollar weakens, it would make it cheaper for Americans to travel to Mexico and spend their dollars at the resort. This could potentially attract more American guests, leading to increased revenue for the resort.
On the other hand, let's quickly evaluate the other options to understand why they would not benefit as much:
- A family from France planning to vacation in the U.S.: A weak U.S. dollar would make traveling and spending money in the U.S. more expensive for the French family. Therefore, they would not benefit from a weak U.S. dollar.
- A Japanese company that makes electronics to sell in the U.S.: A weak U.S. dollar would make the price of Japanese electronics relatively higher for American consumers. This could potentially hurt the sales and profitability of the Japanese company.
- An American factory that makes microchips and sells them in Asia: A weak U.S. dollar would make the price of American microchips relatively cheaper for foreign buyers in Asia. This could potentially increase demand for American microchips and benefit the American factory.
- A Brazilian company that makes clothing to sell in the U.S.: Similar to the Japanese electronics company, a weak U.S. dollar would make the price of Brazilian clothing relatively higher for American consumers, potentially impacting sales and profitability.
To summarize, the Mexican resort that caters to American guests would benefit the most from a weak U.S. dollar, as it could attract more American visitors due to the relative affordability of their services.