What market forces prevent absolute purchasing power parity from holding in real economies? Which of these represent unexploited profit opportunities?
What will be an ideal response?
Any of the forces that create a deviation from the law of one price can also cause a deviation from PPP. See the answer to question 4 . In addition, even if the law of one price were satisfied for all goods, if the consumption bundles in the two countries put different weights on the goods because of taste differences across countries, relative price changes would be reflected in deviations from PPP. It is our opinion that deviations from PPP do not represent unexploited profit opportunities.
You might also like to view...
Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25 percent of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries
This situation underscores the importance of ________ in global marketing. A) dumping B) gray marketing C) transfer pricing D) price skimming E) price fixing
The Discounted Payback Period method is a modified payback period model that considers how long it takes to recover the initial investment in current dollars
Indicate whether the statement is true or false.
Communication line cost is the same in simplex and half-duplex modes
a. True b. False Indicate whether the statement is true or false
A perfect intermediate market exists if buyers can buy and sellers can sell outside of the organization.
Answer the following statement true (T) or false (F)