Asked by Stacy Folkes on Jul 04, 2024
Verified
A lawn mower costs $500 in the US and 5188 Mexican Pesos in Mexico.The current exchange rate is 1USD=12.97MXN.At this rate,
A) The good costs more in the US
B) The good costs more in Mexico
C) The good costs the same across the two countries
D) None of the above
Mexican Pesos
The currency of Mexico, represented by the symbol $ or MXN, used as the primary medium of exchange within the country.
Exchange Rate
the price of one currency in terms of another currency, determining how much foreign currency can be exchanged for a unit of domestic currency.
Lawn Mower
A machine utilizing revolving blades or a blade reel to cut a grass surface to an even height, widely used in garden maintenance.
- Execute the Purchasing Power Parity framework to examine the cost differences of products among different countries.
Verified Answer
SD
Sejal DaradeJul 05, 2024
Final Answer :
A
Explanation :
The lawn mower costs $500 in the US. To compare the prices, convert the price in Mexico from Pesos to USD: 5188 MXN / 12.97 MXN/USD = $400 USD. Therefore, the lawn mower is more expensive in the US.
Learning Objectives
- Execute the Purchasing Power Parity framework to examine the cost differences of products among different countries.