Use Balassa-Samuelson theory to fill in the missing values in the following table

US Bangladesh

Hourly wage $25 80 takas

Hourly output, traded good 5 1

Hourly output, nontraded good 4 3

Local currency price of

Traded good

Non traded good

Market exchange rate

PPP conversion rate (C B /C $ )

(assume traded good is 20% of total)

If Bangladesh's per capita income is 14,000 takas, how much is that in dollars converted at the

market exchange rate?

How much converted using PPP?

What is the dollar price of the nontraded good in Bangladesh, converted using the market

exchange rate?

Briefly explain your calculations.