An American tourist in India pays Rs.25 for a burger which costs him $1 in the U.S. But heknows that market exchange rate is $1 = Rs.40. How does he solve the puzzle?
a) Goods are cheaper in India
b) He got a premium when $1 was converted into Rs.40.
c) He is confronted with two rates: purchasing power parity rate and market determinedrate
d) None of the above