In the Presence of Purchasing-Power Parity,if Five Pesos Exchange for One

question 28

Multiple Choice

In the presence of purchasing-power parity,if five pesos exchange for one dollar and a new smartphone sells for $100 in Dallas,then the identical smartphone in Mexico City should cost:

• A) 20 Pesos
• B) 80 Pesos
• C) 250 Pesos
• D) 500 Pesos

---

Definitions:

Social Insurance

Social insurance is a government or publicly sponsored system that provides financial protection to individuals against economic risks such as unemployment, disability, or old age.

Equality-Efficiency Trade-Off

A concept in economics suggesting that there can be a trade-off between achieving economic equality and efficiency within a society.

Economic Efficiency

A situation in which all resources are allocated in a way that maximizes total benefit or output with minimal waste.

Poverty Rate

The proportion of a population living below the national poverty line, indicating the level of economic deprivation.