Suppose that the NFL Super Bowl ticket costs $125 and the Wimbledon ticket costs £75 and ex = 1.77 (ex=exchange rate). Answer the following 5 questions based on this information.
21.What is the relative price of the two sporting events? [Hint! Relative prices are ratios of two prices expressed in the same units (of currency) indicating percentage differences.]
22. Which event is relatively inexpensive?
24. The fall in the dollar price of pounds raised the price of Super Bowl tickets relative to Wimbledon tickets. True or false? Why?
Ans:
converting everything to dollars,
21. wimbledon cost = 75* 1.77 = $132.75
NFL Super Bowl cost = $125
so, relative price = (132.75-125)/125 = 6.2%.
or, Wimbledon tickets are 6.2% more expensive than that of NFL Super Bowl Tickets in US $.
22. NFL Super Bowl ticket is relatively inexpensive as it costs less.
24. TRUE.
A fall in $ price of pounds means for every pound, one will have to pay less $ now. So, overall, now the cost of Wimbledon tickets would be lesser as compared to Super bowl tickets as the multiplication factor , i.e exchange rate rate will decrease from 1.77. That means Super Bowl is now relatively more costlier.
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