If Pepperoni Pizzas Sell for $10 in Berkeley, California, and £10

question 57

Multiple Choice

If pepperoni pizzas sell for $10 in Berkeley, California, and £10 in London, England, and the exchange rate is $1.35 = £1,

• A)the law of one price has been violated.
• B)either the British government or the American government must be interfering with the market determination of the exchange rate.
• C)the value of the dollar versus the pound is likely to rise.
• D)there is no contradiction in the information given because pizza is not a tradeable good.

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Definitions:

Ace Of Spades

Often considered the highest card in a deck of playing cards.

King Of Spades

A playing card in the standard deck that bears the image of a king and the spade suit symbol.

Standard Deviation

A measure of the dispersion or variability of a set of values, indicating how much the values differ from the mean of the set.

Boys And Girls

Refers to male and female children or adolescents collectively.