Suppose Purchasing Power Parity (PPP) Depends Only on Hotel Rooms

question 174

Multiple Choice

Suppose purchasing power parity (PPP) depends only on hotel rooms. The exchange rate is C$1.00 = US$0.80 and a room at the Weston Hotel in Niagara Falls, Ontario costs C$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, New York should be

• A) US$ 80.
• B) US$ 200.
• C) US$ 250.
• D) US$ 125.
• E) US$ 160.

---

Definitions:

Manufacturing Activities

Tasks and processes involved in converting raw materials into finished goods, often including assembly, fabrication, and quality control.

Time Variance

The difference between the actual time taken to complete a task and the estimated time planned for it.

Direct Labor Hours

The total number of hours worked directly on a product or service by employees, usually used to allocate manufacturing costs.

Price Variances

Differences between actual and expected or standard costs that are attributed to changes in the price of goods or services.