In Order for the Condition E$/HK$ = PUS/PHK to Hold

question 73

Multiple Choice

In order for the condition E$/HK$ = PUS/PHK to hold, what assumptions does the principle of purchasing power parity make?

• A) Only that there are no transportation costs and restrictions on trade.
• B) Only that the markets are perfectly competitive, i.e., P = MC.
• C) The factors of production are identical between countries.
• D) No arbitrage exists.
• E) HK and the U.S. are perfectly competitive and there are no transportation costs or restrictions on trade.

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Definitions:

P-bar Formula

A statistical technique used in quality control to determine the proportion of defective items in a batch or process.

Quality Metrics

Quantitative measures used to gauge the quality of products, processes, or services, against defined standards.

3-sigma Range Chart

A statistical chart used in quality control that illustrates the variation of a process within three standard deviations (3-sigma) from the mean, identifying outliers.

Average Range

In statistics, it is the mean difference between the largest and smallest values in a set of data, used as a measure of statistical dispersion.