The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4

-If the price of an ounce of gold is 200 ZARs in South Africa and $75 in Canada, what will be the South African Rand (ZAR) per Canadian dollar (C$) exchange rate?
A)C$1 = 4.25 ZAR
B)C$1 = 1.75 ZAR
C)C$1 = 2 ZAR
D)C$1 = 2.67 ZAR
E)C$1 = 4 ZAR

Question

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
 
-If the price of an ounce of gold is 200 ZARs in South Africa and $75 in Canada, what will be the South African Rand (ZAR) per Canadian dollar (C$) exchange rate?
A)C$1 = 4.25 ZAR 
B)C$1 = 1.75 ZAR 
C)C$1 = 2 ZAR 
D)C$1 = 2.67 ZAR 
E)C$1 = 4 ZAR

Quizplus · Accepted Answer

We can use the formula:

Exchange rate = Domestic price of foreign currency / Foreign price of foreign currency

Using this formula, we get:

Exchange rate = 200 ZAR / $75 CAD
Exchange rate = 2.67 ZAR/CAD

Therefore, the answer is choice D: C$1 = 2.67 ZAR.

The Figure Below Shows the Demand (D) and Supply (S)