Recall the Application about the price of Big Macs in China and around the world to answer the following question(s).
The following table is taken from the Application. For several years, The Economist has measured the prices of Big Macs throughout the world and compared the price differences to exchange rates.

-According to the table, the price of Big Macs converted to U.S. dollars varies widely around the world. This shows that Big Mac pricing does NOT follow the theory of

Question

Recall the Application about the price of Big Macs in China and around the world to answer the following question(s).
The following table is taken from the Application. For several years, The Economist has measured the prices of Big Macs throughout the world and compared the price differences to exchange rates.
 
-According to the table, the price of Big Macs converted to U.S. dollars varies widely around the world. This shows that Big Mac pricing does NOT follow the theory of

Quizplus · Accepted Answer

The theory of purchasing power parity (PPP) suggests that exchange rates between countries should be such that the same basket of goods (in this case, a Big Mac) should have the same price regardless of the country. However, the table shows that this is not the case, as the price of a Big Mac converted to U.S. dollars varies widely around the world. Therefore, the pricing of Big Macs does not follow the theory of purchasing power parity.

Recall the Application About the Price of Big Macs in China