Question

Suppose that the NFL Super Bowl ticket costs $125 and the Wimbledon ticket costs £75 and...

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?

Homework Answers

Answer #1

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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