Country Income per capita iPhone price Country 115600 units

Country Income per capita iPhone price Country 115,600 units Country 2 34,500 units Country 3 22.670 units Country 4 20,000 units 999 units 2,300 units 10,500 units 1,900 units

Solution

The purchasing power parity (PPP)-adjustment factor for each country can be calculated using the following formula:

S = P1/P2

S represents exchange rate of currency 1 to currency 2

P₁ represents the cost of good x in currency 1

P₂ represents the cost of good x in currency 2 (here, U.S. dollar)

PPP for country 1= 999/699 = 1.43, Cost of IPhone in Country 1= 1.43*999= $1428.57

PPP for country 2= 2300/699 = 3.3, Cost of IPhone in Country 2= 3.3*2300= $7590

PPP for country 3= 10500/699 = 15.021, Cost of IPhone in Country 3= 15.021*10500= $159705

PPP for country 4= 1900/699 = 2.71, Cost of IPhone in Country 4= 2.71*1900= $5149