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A Certain Cell Phone Sells for 2400 Yuan in China

question 112

Essay

A certain cell phone sells for 2400 yuan in China and for $300 in the U.S. The nominal exchange rate is 6.5 yuan per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the cell phone cheaper?


Definitions:

Marginal Utility

The augmented joy or usefulness a shopper obtains by buying an extra unit of a commodity or service.

Utility Maximization

The economic principle that individuals seek to allocate their resources in a way that maximizes their satisfaction or utility.

Consumption

The spending on goods and services by households or individuals.

Marginal Utility

The supplementary satisfaction or benefit obtained from using an additional unit of a product or service.

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