Question

Hellers are a large value-added meat processor based in Kaiapoi, Christchurch. Assuming Hellers use a standard pricing strategy in Australia andNew Zealand, the price they charge a local (i.e. Christchurch) supermarket for a tonne of bacon would be similar (i.e. taking exchange rates intoaccount) to what an Australian customer would pay "____ Kaiapoi/Christchurch".

a. Cost Insurance and Freight.

b. Ex works.

c. Carriage and Insurance Paid To.

d. Free on Board.

Answer 1

When the price charged to a local buyer and an international buyer are equal, the trade agreement most suitable is ‘Free on Board’.

Answer is choice (d)

Regarding others which are not correct:

Options (a) ‘Cost Insurance and Freight’ and (c ) ‘Carriage and Insurance Paid To’ includes transportation and insurance expenses paid by the seller. For a uniform price for local and international buyers, this is not possible.

Option ( b) ‘Ex works’ means goods are made available at the seller’s premises.