A pair of shoes cost 80 euros in France. The same pair of shoes cost $100...

A pair of shoes cost 80 euros in France. The same pair of shoes cost $100 in the U.S.
1. Assuming you would like to pay less, where would you buy the shoes?
2. Suppose instead the exchange rate is $1.3 per euro. What is the $ price of shoes in France?
3. Assuming you would like to pay less, where would you buy the shoes?

Expert Solution

a)

The current Exchange rate is $1 = Euros 0.9

Given the cost of shoes in France = 80 Euros

The cost of Shoes in U.S. = $100 = 100 * 0.9 = Euros 90

At current exchange rate a pair of shoes cost less in France.

b)

Given the Exchange rate is Euro 1 = $ 1.3

Given the cost of shoes in France = 80 Euros

The dollar cost of shoes in France = 80 * 1.3 = $ 1.04

jeff jeffy answered 2 years ago

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