Assume that $1 can buy you either *118 or $\le$.5087. If a TV in London costs $\le$1,375, what will that identical TV cost in Tokyo if absolute purchasing power parity exists?

Question

Quizplus · Accepted Answer

Given the exchange rate is either 118 or 0.5087, and assuming absolute purchasing power parity, the cost in Tokyo can be calculated using either rate. However, the correct interpretation of the symbols and context suggests using the rate that directly converts the London price to the Tokyo price. The correct calculation involves dividing the London price by the exchange rate that represents how many foreign currency units can be bought with 1 unit of domestic currency. If 1 unit buys 0.5087 in the foreign currency, then to find the cost in the foreign currency for an item priced at 1,375 units in the domestic currency, you divide 1,375 by 0.5087, resulting in approximately 2,702.57. However, none of the provided options match this calculation directly, suggesting a misunderstanding in the interpretation of the symbols or a typographical error in the question or options. Given the options provided, none directly correspond to the expected outcome of the calculation based on standard financial principles and the usual interpretation of exchange rates. Therefore, without accurate exchange rate values or a clear understanding of the symbols used, a precise calculation cannot be provided based on the information given.

Assume That $1 Can Buy You Either *118 Or ≤\le≤ 5087 If a TV in London Costs

Assume That $1 Can Buy You Either *118 Or $\le$ 5087 If a TV in London Costs