Can You Believe It?

Namibia and the Big Mac Index

Namibia GDP per capita = $5,400

US GDP per capita = $47,000

http://www.termpaperslab.com/term-papers/Mc-Donalds-Big-Mac-Index/134749.html

On the website above it is stated that Namibia Dollar is pegged to South Africa. Therefore, the price fluctuation of the Big Mac in these 2 countries is the same. To determine the price of Big Mac in Namibia, first we have to get the price of Big Mac in South Africa:

South Africa’s Big Mac price in US Dollar = $2.24

After that, we need to convert it to Namibian dollar:

1 South Africa Rand = 1.02106 Namibia Dollar (As of April 11^th 2009)

$2.24 x 1.02106 = $2.29

Therefore, a Big Mac costs about $2.29 US Dollar in Namibia with the GDP per capita of $5,400.

The price of a Big Mac in United States costs about $3.57. Its GDP per capita is $47,000.

Price adjustment on the exchange rate basis:

$47,000 = $3.57

$5,400 = $ x

$ x = (5,400/47,000) X 3.57

$ x = $ 0.41

Given those values, United States should price a Big Mac in Namibia at $ 0.41 cents each.