The Economist magazine uses the price of a Big Mac to determine whether a currency is undervalued or overvalued. In July 2017, the price of a Big Mac was $5.30 in New York, 19.80 yuan in Beijing, and 6.50 Swiss francs in Geneva. The exchange rates were 6.79 yuan per U.S. dollar and 0.96 Swiss francs per U.S. dollar.

a. Was the yuan undervalued or overvalued relative to purchasing power parity?

b. Was the Swiss franc undervalued or overvalued relative to purchasing power parity?

c. Do Big Mac prices in different countries provide a valid test of purchasing power parity?