A Bottle of Dom Perignon Is Selling for 550FF in Paris

question 14

Multiple Choice

A bottle of Dom Perignon is selling for 550FF in Paris and the exchange rate is $0.167/FF. The champagne is selling for $95 on average in the U.S. exclusive of transportation cost. The price in the U.S. is:

• A) priced just right.
• B) is $3.15 undervalued.
• C) is $3.15 overvalued.
• D) the Law of One Price does not hold for special commodities like champagne.