Assume that $1 can buy you either ¥117.341 or £.5725. If a sofa in London costs £650, what will that identical sofa cost in Tokyo if absolute purchasing power parity exists?

Question

Quizplus · Accepted Answer

To find the cost of the sofa in Tokyo under absolute purchasing power parity, first convert the cost from pounds to dollars: £650 / £0.5725 = $1,135.65. Then convert dollars to yen: $1,135.65 * ¥117.341 = ¥133,226.

Assume That $1 Can Buy You Either ¥117