Suppose on 1 January 2023 a typical simple shirt towel sells for 10 Euros in France. Lots of firms from various countries can produce and sell such towels. Thus competition is tough. Bursalı Exports from Turkey is one such firm. Suppose on 1 January 2023 1 Euro is worth 25 TL. Suppose on 1 January 2023 Bursalı Exports cost structure per towel is as follows: 

125TL raw materials, 

75TL labor , 

15 TL all other cost items like electricity etc 

Thus each towel costs 215 TL to produce. 

Assuming costless transport, when Bursalı Exports sells a towel for 10 Euros in France it makes a profit of 35 TL or 35/215=0.16 Profit rate. Let us consider Bursalı Exports situation in November 2023 under various TL inflation and TL depreciation Scenarios.

Let us replace Bursalı Exports with Renault and "simple towel" with "Renault Megane E-Tech". Would anything change? Briefly explain.

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The replacement of Bursal Exports with Renault and simple towel with Renault Megane ETech in this sc... View the full answer