Asked by bryan chavez on Jun 15, 2024
Verified
A product sells for $7,500 in Canada.The exchange rate is $1USD:$1.33CAD.If the law of one price holds,what is the price of the product in United States?
A) $5,639 USD
B) $9,975 USD
C) $6,750 USD
D) $7,162 USD
Law of One Price
The law of one price posits that in efficient markets, identical goods should have only one price, accounting for transportation costs and after tax adjustments.
Exchange Rate
The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another.
Canadian Dollars
The Canadian Dollar is the currency of Canada, symbolized as CAD or C$, and it is one of the major currencies traded globally.
- Comprehend the idea of purchasing power parity and how it functions within the domain of global finance.
Verified Answer
JC
Jazzlyn ChaidezJun 15, 2024
Final Answer :
A
Explanation :
To find the price in USD, divide the CAD price by the exchange rate: $7,500 CAD / 1.33 = $5,639 USD.
Learning Objectives
- Comprehend the idea of purchasing power parity and how it functions within the domain of global finance.