If a Certain Automotive Part Can Be Purchased in Mexico

question 137

Multiple Choice

If a certain automotive part can be purchased in Mexico for 60 pesos or in the United States for $6.25 and if the nominal exchange rate is 8 pesos per U.S. dollar, then the automotive part:

• A)is less expensive in Mexico.
• B)is more expensive in the United States.
• C)is less expensive in the United States.
• D)costs the same in Mexico and the United States.

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Definitions:

Price Orientation

An approach to pricing strategy focused on the cost to set prices, where customer demand or competition may play a secondary role.

Donuts

A type of fried dough confection or dessert food, commonly circular with a hole in the middle, often glazed or sugar-coated and sometimes filled.

Demand Curve

A graphical representation showing the relationship between the price of a product and the quantity of the product that consumers are willing and able to buy.

Economic Theory

Economic theory involves a set of principles explaining how economies operate, including the production, distribution, and consumption of goods and services.