According to the principle of purchasing power parity, if a 20-ml bottle of Diet Coke costs €0.80 in Paris, £0.50 in London, and $1.10 in Chicago, the exchange rate between the:

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The principle of purchasing power parity (PPP) suggests that in the absence of transaction costs and barriers to trade, the same goods should have the same price when expressed in the same currency. To find the correct exchange rate between the euro and the pound, we compare the prices of the Diet Coke in Paris and London: €0.80 in Paris and £0.50 in London. To make the prices equal when converted, €0.80 must equal £0.50, which implies an exchange rate of €1.60 = £1. This is because €0.80/£0.50 = €1.60/£1.

According to the Principle of Purchasing Power Parity, If a 20-Ml