Suppose the Same Automobile Is Produced by a Multinational Firm

question 42

Multiple Choice

Suppose the same automobile is produced by a multinational firm in the US and Europe. The price of the car is $12,500 in the US or €25,000 in Europe,and there are no transport costs or tariffs. Then according to the law of one price,the value of the dollar in terms of the euro should be

• A) ½
• B) 1
• C) 2
• D) 2.5
• E) 4

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Definitions:

Multitasking

The act of performing multiple tasks simultaneously or switching rapidly between tasks.

Intuitive

Relating to or using intuition, the ability to understand something immediately without the need for conscious reasoning.

Mindlessness

A state of reduced cognitive awareness, often characterized by automatic or habitual actions without active engagement or reflection.

Mental Inflexibility

The inability or difficulty in adjusting one's thoughts, behaviors, or strategies in response to new information or changing circumstances.