Dollar Strengthening Reduces Import Cost Steps:

• The original import price is $2500, equivalent to a fixed amount in yen at the initial exchange rate.
• A 10% strengthening of the US dollar means it buys 10% more yen per dollar.
• The yen price of the car remains unchanged, so the dollar cost decreases proportionally.
• New import price = $2500 × (1 - 0.10) =$2250.

Why B is correct:

• Dollar appreciation lowers the dollar cost of yen-denominated imports by the appreciation percentage, per exchange rate mechanics.

Why the others are wrong:

• A: Implies a 20% dollar strengthening, exceeding the given 10%.
• C: Assumes no exchange rate impact, ignoring the dollar's strengthening.
• D: Reflects dollar weakening, opposite of the scenario.

Final answer: B