Asked by RUSARO Sahia on Sep 24, 2024
Verified
A lawn mower costs $500 in the US and 8188 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, used for all financial transactions within the country.
Exchange Rate
The value of one currency for the purpose of conversion to another.currency for the purpose of conversion to another.
Lawn Mower
A machine equipped with revolving blades to cut grass to an even length, typically used in garden and lawn maintenance.
- Utilize the Purchasing Power Parity theory to assess the expense of goods in diverse countries.
Verified Answer
RS
RAWAHA SIDDIQUI4 days ago
Final Answer :
B
Explanation :
To determine where the good costs more, convert the price from Mexican Pesos to USD using the given exchange rate: 8188 MXN / 12.97 MXN/USD = $631.15. Since $631.15 (price in Mexico when converted to USD) is more than $500 (price in the US), the good costs more in Mexico.
Learning Objectives
- Utilize the Purchasing Power Parity theory to assess the expense of goods in diverse countries.