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Interpreting Relative Prices in International Trade
A high-end bicycle is manufactured and sold in Switzerland for 2,000 CHF. A comparable bicycle made and sold in Canada costs 1,600 CAD. If the nominal exchange rate is 1.3 Canadian dollars per Swiss franc (1.3 CAD/CHF), calculate the relative price of the imported Swiss bicycle in Canada. After your calculation, briefly explain what this relative price figure indicates about the two bicycles' costs in Canada.
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Calculating Relative Price of Imported Goods
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Interpreting Relative Prices in International Trade
A specific brand of smartphone costs ¥150,000 in Japan. A comparable smartphone made and sold in Canada costs $1,300 CAD. If the exchange rate changes from 0.010 CAD per JPY to 0.009 CAD per JPY, the imported Japanese smartphone becomes less expensive relative to the Canadian one.