A Hamburger Costs $1

question 64

Multiple Choice

A hamburger costs $1.79 in New York and €2.54 in Paris. If the exchange rate is $0.93 per euro, what price difference exists in terms of the European currency?

• A) The hamburger sells for €0.13 less in New York.
• B) The hamburger sells for €0.13 more in New York.
• C) The hamburger sells for €0.62 less in Paris.
• D) The hamburger sells for €0.62 more in Paris.
• E) The hamburger sells for the same price in both cities.

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Definitions:

Retained Earnings

The portion of net income that is not distributed as dividends to shareholders, but rather reinvested in the business or kept as reserve.

Equity Method

A method of accounting employed by a business to log its investment in another firm when it possesses considerable sway but lacks complete authority.

Noncontrolling Interest

A minority stake in a company that is not sufficient to confer control, often reflected in the equity section of the parent company's balance sheet.

Equipment

Tangible property owned by a company that is used in its operations, such as machinery, computers, and office furniture.