Compare the price of a pound of salmon in the United States with a pound of salmon in Japan. If we assume that the price of salmon in the United States is $4 per pound, while in Japan it is 1,488 yen, and the dollar-yen exchange rate is US$1 = ¥124, then the real exchange in terms of salmon is
A) 1.
B) 0.5.
C) 0.33.
D) 0.25.

Question

Quizplus · Accepted Answer

To compare the price of salmon in the United States with Japan, we need to convert the Japanese price from yen to dollars. We can do this by dividing the Japanese price by the dollar-yen exchange rate:

1,488 yen ÷ 124 yen/dollar = $12

So, the price of salmon in Japan is $12 per pound.

Now, we can compare the two prices:

US price = $4 per pound
Japanese price = $12 per pound

To find the real exchange rate in terms of salmon, we need to divide the US price by the Japanese price:

US price ÷ Japanese price = $4 ÷ $12 = 0.33

Therefore, the real exchange rate in terms of salmon is 0.33, which means that one pound of salmon in Japan is worth 0.33 pounds of salmon in the United States.

The best choice is C.

Compare the Price of a Pound of Salmon in the United