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17 Jul 2023
During a shopping spree in China , C. Dundee has bought a Sony CD boom box (with woofers and tweeters) for CY 2,000, jade jewelry for CY 4,000, and four custom-made suits for CY 25,000. The spot exchange rate is CY/AUD= 5.
(a) If PPP held, what should the same boom box, jewelry, and suits cost in Australia?
(b) Suppose Mr Dundee is (unexpectedly) stopped at customs as he arrives in Melbourne, and must pay import duties of 20 percent. If the same boom box, jewelry, and suits cost AUD 450, AUD 1,500, and AUD 8,000 in Australia, respectively, was his shopping spree worth at least the HKD 10,000 paid for airfare and hotels during his trip?
During a shopping spree in China , C. Dundee has bought a Sony CD boom box (with woofers and tweeters) for CY 2,000, jade jewelry for CY 4,000, and four custom-made suits for CY 25,000. The spot exchange rate is CY/AUD= 5.
(a) If PPP held, what should the same boom box, jewelry, and suits cost in Australia?
(b) Suppose Mr Dundee is (unexpectedly) stopped at customs as he arrives in Melbourne, and must pay import duties of 20 percent. If the same boom box, jewelry, and suits cost AUD 450, AUD 1,500, and AUD 8,000 in Australia, respectively, was his shopping spree worth at least the HKD 10,000 paid for airfare and hotels during his trip?
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