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

question 80

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, New York costs US$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, Ontario should be

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

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Definitions:

Insurance Premiums

The amount of money an individual or business pays for an insurance policy.

Break-even Point

The financial analysis point at which total costs and total revenues are equal, yielding no net loss or gain.

Break-even Point

The break-even point is the point at which total costs equal total revenues, resulting in neither profit nor loss for the business.

Estimated Fixed Costs

Forecasted expenses that do not vary with the level of production or sales over a specific period of time.