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Actual average price of a big mac in china

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On average, the cost of a Big Mac in the U.S. is $5.30 (Jul 2017)  If purchasing power parity holds, how much should the Big Mac cost in China if the exchange rate is $1 = RMB 6.512?

The actual average price of a Big Mac in China is 20 RMB. What dollar price is implied by PPP? How do you explain the difference between the implied price and the actual price?

Please answer and explain both parts of the question.

Reference no: EM131942257

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