Question

A latte in the U.S. costs $3.00. An identical latte in Country X costs 60 casatas. The implied exchange rate between the two currencies is _____ casatas per dollar. At this rate of exchange a good that costs $30 in the U.S. should be expected to cost ____ casatas in Country X.:

Answer 1

The exchange rate would be 20 casatas per 1 dollar.

A good that costs 30 dollars should be expected to cost 600 casatas.

Step-by-step explanation:

We can establish a ratio between these two currencies (where dollars is the numerator and casatas the denominator):

`(3)/(60)`

If we divide both the numerator and denominator by three we get:

`(1)/(20)`

Therefore, the exchange rate would be 20 casatas per 1 dollar.

At this rate of exchange a good that costs $30 in the U.S. should be expected to cost:

To solve this we can make two ratios and solve using a rule of three:

`(1)/(20)=(30)/(x)`

Now we will solve for x:
`x = (20)(30)/1= 600`

Therefore it should be expected to cost 600 casatas.