Economics majors!! Based on the following assumption, which vacation would be...

J

Jack

Active member
...less expensive? Suppose that a three-star hotel room costs US$80 per night in the United States and 80 euros per night in France (assume the quality of a three-star hotel room in the United States is the same as that of a three-star hotel room in France). Suppose that the exchange rate is 0.80 euros per U.S. dollar.

Assume that the only cost difference between a vacation in France and a vacation in the United States is due to the difference in the price of a hotel room. Based on this assumption, which vacation would be less expensive?




A. Vacation in the United States

B. Vacation in France

C. They are both the same
 
V

vasel2007

New member
Sure Economics major.
Lets work out the exchange rate and get the same currency rates and in this case it will have to be all in dollars.
If $1=€ 0.80
there fore 0.80*80= $64
so will have to compare $64 in France and $80 in US for a 3 star room and reach to the following conclusion;
A vacation is france is $64 in a 3 star room less than $80 in the US for the same room
So one in France is less Expensive.
go for B
 
M

Mark

Active member
A. If the only cost is the price of the hotel room.

U.S.: $80 usd = .80 X 80 = 64 Euros

France: 80 Euros = 80 Euros
 
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