Question: A certain commodity cost 0.5 pound sterling in the United Kingdom. In U.S. denominated dollars, this same item can be purchased for 85 cents. The exchange rate is 1 pound sterling = $1.80 U.S.
a. Should this commodity be purchased in the United Kingdom or in the United States?
b. If 100,000 items comprise the purchase quantity, how much can be saved in view of your answer to Part (a)?