Assume the exchange rate is 1 U.S.dollar equals 1.10 Canadian dollars.If purchasing power parity is correct, a DVD that has a price of $10 in Rochester, New York, in Canada has a price of ________ Canadian dollars.

Question

Quizplus · Accepted Answer

Purchasing power parity suggests that the price of goods should be the same in different countries when expressed in a common currency. Therefore, a $10 DVD in the U.S. should cost 10 x 1.10 = 11.00 Canadian dollars.

Assume the Exchange Rate Is 1 U