Question

UIIII. III LICU 17) American college students on the USA-Canadian border have discovered they can buy Canadian beer for less money than what they pay in the states. Recently Jerry paid C$5.50 for a six-pack of beer while he was in Canada while his roommate, Ben, paid $5.75 for a six-pack of the same beer in the states. If the current exchange rate is $1.0335/CS, who paid less and why? A) Jerry paid less because his purchase cost 5.68 in USD. B) Jerry paid less because his purchase cost 5.32 in USD. C) Ben paid less because his purchase cost C$5.26. D) Ben and Jerry actually paid the same amount for their beer. Markets are efficient!

CAN YOU SHOW THE STEPS PLEASE

Answer 1

We will first calculate the rate difference between Canadian Dollar and US dollar with help fo below steps.

1 Canadian dollar = 1.0335 US dollar

Then for 5.50 Canadian dollar Jerry need to pay 5.50*1.0335 = $5.68 taking to two decimals

Hence to buy 6 pack of beer in Canada Jerry needs to pay $5.68

And to buy the same beer in US Ben paid $5.75

This clearly shows that Jerry paid less than Ben to buy the beer

So the answer over here is

A) Jerry paid less because his purchase cost was 5.68 is USD