According to Purchasing-Power Parity Theory,if the Same Fast-Food Hamburger Costs

question 21

Multiple Choice

According to purchasing-power parity theory,if the same fast-food hamburger costs $2.50 in Canada and 5 euros in France,what should the nominal exchange rate be?

• A) 1 / 4 euros per dollar
• B) 1 / 2 euro per dollar
• C) 1 euro per dollar
• D) 2 euro per dollar

---

Definitions:

Monopolist

A single seller in a market who has significant control over the price and supply of a product or service.

Horizontal Labor Supply Curve

Suggests that the supply of labor remains constant regardless of changes in wage rates.

Returns To Scale

The rate at which output increases as inputs are increased proportionately in the production process, indicating economies or diseconomies of scale.

Downward-Sloping

A term used to describe a graph line that decreases in height as it moves from left to right, commonly associated with demand curves in economics, indicating that quantity demanded decreases as price increases.