pte academic reading multiple choice multiple answer practice questions 6

PTE Reading Multiple-choice, Choose Multiple Answer – Read the passage and answer by selecting all the correct responses. More than one response is correct. Here is pte academic reading multiple choice multiple answer practice questions 6.

pte academic reading multiple choice multiple answer practice questions 6

pte academic reading multiple choice multiple answer practice questions 6

9. Read the passage and answer the following question.

While economists widely cite the Big Mac index as a reasonable real-world measurement of purchasing power parity, the burger methodology has some limitations. In many countries, eating at international fast-food chain restaurants such as McDonald’s is relatively expensive in comparison to eating at a local restaurant, and the demand for Big Macs is not as large in countries such as India as in the United States. Social status of eating at fast food restaurants such as McDonald’s in a local market, what proportion of sales might be to expatriates, local taxes, levels of competition, and import duties on selected items may not be representative of the country’s economy as a whole.

In addition, there is no theoretical reason why non-tradable goods and services such as property costs should be equal in different countries: this is the theoretical reason for PPPs being different from market exchange rates over time. The relative cost of high – margin products, such as essential pharmaceutical products, or cellular telephony might compare local capacity and willingness to pay, as much as relative currency values.

Nevertheless, McDonald’s is also using different commercial strategies which can result in huge differences for a product. overall, the price of a Big Mac will be a reflection of its local production and delivery cost, the cost of advertising (considerable in some areas), and most importantly what the local market will bear – quite different from country to country, and not all a reflection of relative currency values.

Question – According to the text, what are some of the limitations of the Big Mac Index?

1. The demand for big macs is not the same across all countries
2. The local production and delivery costs will be different in different countries
3. The levels of competition are not the same in all countries
4. The local economists might prefer other another index than Big Mac
5. The Big Mac Index does not consider the cost of essentials such as cellular telephony

Correct Answers –

1. The demand for big macs is not the same across all countries
2. The local production and delivery costs will be different in different countries

 

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