If a Big Mac Costs C$3

question 10

Multiple Choice

If a Big Mac costs C$3.00 in Canada and $2.31 in the USA, according to purchasing power parity, what is the implied exchange rate in C$/US$?

• A) 1.3793
• B) 0.725
• C) 1.3276
• D) None of the above

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Definitions:

Chief Financial Officer

A senior executive responsible for managing the financial actions of a company.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in revenues, indicating the extent to which a firm can increase profits by increasing sales.

Fixed Costs

Expenses that do not change in proportion to the level of goods or services produced within a certain period.

Variable Costs

Costs that vary directly with the level of production or service provision.