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QUESTION 9 a. If a Canadian hockey stick has a price of $36, how much does it cost in Europe, assuming an exchange rate of
QUESTION 9 a. If a Canadian hockey stick has a price of $36, how much does it cost in Europe, assuming an exchange rate of 1 euro = $1.50 Canadian? b. The table below shows some actual data concerning exchange rates and the prices of Big Macs in the summer of 2012. Location Big Mac Price Actual Exchange Rate Toronto 5.11 Canadian dollars Switzerland 5.9 Swiss francs $1 Canadian 0.85 Swiss francs Singapore 6.5 Singapore $1 Canadian = 1.21 Singapore dollars dollars Hong Kong 15.31 Hong Kong $1, Canadian = 7.65 Hong dollars Kong dollars Are the actual exchange rate overvalued or undervalued? Assuming purchasing power parity, what should the price of Big Macs be in Singapore? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)
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