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Brazil and Peru sell coffee in the U.S. for $10 per pound. The Brazilian Real falls...

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Finance

Brazil and Peru sell coffee in the U.S. for $10 per pound. TheBrazilian Real falls from R$4:$1 to R$6:$1 while the Peruvian Solstays at the same level of Sol 3:$1. It cost 20 R$ per pound to getthe coffee to the store shelf. You are the head of Brazil CoffeeCo. When the currency falls, your marketing chief tells you that ifyou lower the price to $8 per pound, you could sell 50% more poundsof coffee. Should you follow the advice from marketing? Assume yourcosts per pound do not change. Note: Brazil can pursue twostrategies: Margin (make more money per pound) or Market Share(lower price to make same profit)

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