You own your own business and need to purchase some iPhones.You check out the Canadian and U.S. Apple websites and find identical phones.In the US the iPhone sells for US$840 while in Canada the price is C$1100.

1. Where would you buy the iPhone if the exchange rate between the Canadian dollar and the US dollar was US$0.70 per Canadian dollar?Provide calculations to support your answer.
2. If there is a profit opportunity, where would you resell it if you wanted to make a profit? (ignore any taxes, tariffs, transportation costs, and differences in quality.)
3. Does purchasing power parity (PPP) hold? Explain. If not, at what exchange rate does purchasing power parity hold?