If a certain automotive part can be purchased in Mexico for 60 pesos or in the United States for $6.25 and if the nominal exchange rate is 8 pesos per U.S. dollar, then the automotive part:
A)is less expensive in Mexico.
B)is more expensive in the United States.
C)is less expensive in the United States.
D)costs the same in Mexico and the United States.

Question

Quizplus · Accepted Answer

The part is less expensive in the United States. This is because one dollar buys 8 pesos and 6.25 dollars buys 50 pesos, and the automotive part required 62 pesos in Mexico.

If a Certain Automotive Part Can Be Purchased in Mexico