If purchasing-power parity held,if a Big Mac costs $2 in Canada,and if 10 Mexican pesos trade for $1 Canadian dollar,then a Big Mac in Cancun,Mexico should cost:
A) 2 pesos.
B) 5 pesos.
C) 10 pesos.
D) 20 pesos.

Question

Quizplus · Accepted Answer

Purchasing-power parity implies that the same goods should cost the same in different countries when prices are converted into a common currency. If a Big Mac costs $2 in Canada, and 10 Mexican pesos trade for $1 Canadian dollar, then a Big Mac should cost 20 pesos in Mexico (2 Canadian dollars x 10 pesos per Canadian dollar).

If Purchasing-Power Parity Held,if a Big Mac Costs $2 in Canada,and