Which of the following scenarios exemplifies the purchasing power parity (PPP)theory?
A) A cell phone manufactured in Russia costs lesser in UK than in Egypt.
B) A cell phone manufactured in Russia costs more in UK than in Egypt.
C) A cell phone manufactured in Russia costs lesser in UK and Egypt than other countries.
D) A cell phone manufactured in Russia costs the same in UK and Egypt.

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) theory suggests that in the absence of transportation costs and other barriers, identical goods should have the same price in different countries when expressed in a common currency.

Which of the Following Scenarios Exemplifies the Purchasing Power Parity