To compare the cost of the mobile phone in both countries, we need to convert the price in Paris from euros to dollars using the exchange rate given:
€187 x $1/€0.78 = $239.74
So the mobile phone costs $239.74 in Paris and $254 in New York.
Since the phone is cheaper in Paris, Paul should buy it there.
To check our answer, we can also calculate the exchange rate that would make the prices equal:
$254 / €187 = $1.36/€1
If the exchange rate were $1.36/€1, then the price in Paris would be:
$1.36/€1 x €187 = $254.32
Since $254.32 is more expensive than the price in New York, our original answer is correct- Paul should buy the phone in Paris.
Paul travelled from the US to France when the exchange rate was €0.78 = $1.
He saw a mobile phone in a shop in Paris for €187.
The same mobile phone cost $254 in New York.
Where should Paul buy the mobile phone?
Show your working and check your answer.
1 answer