A Pair of Running Shoes Costs HK$588 in Hong Kong

question 6

Multiple Choice

A pair of running shoes costs HK$588 in Hong Kong, but C$97.85 in Canada. If goods must be sold with one price, what is the spot rate? Ignore transportation costs for simplicity.

• A) C$0.2535 = HK$1
• B) C$0.3396 = HK$1
• C) C$0.4265 = HK$1
• D) C$0.1664 = HK$1
• E) C$0.6029 = HK$1

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Definitions:

Cotton

A soft, fluffy staple fiber that grows in a boll, or protective case, around the seeds of cotton plants of the genus Gossypium.

Export

The act of sending goods or services from one country to be sold or traded in another.

Westward Migration

The movement of people westward across the United States, particularly notable during the 19th century, often for the purpose of land acquisition and settlement.

Plantation Economy

An economic system historically associated with the large-scale agricultural estates that specialized in cash crops, reliant on slave or cheap labor, primarily found in the Americas.