Last Wednesday, while in the Calgary airport and awaiting a flight to Winnipeg, I had lunch at a Chili’s. I normally don’t have alcohol with lunch, but the price of a Margarita got my attention: $8.75 in Canadian dollars. That would have been a deal even if it had been $8.75 in U.S. dollars. At an exchange rate of 76 U.S. cents to the Canadian dollar, that’s $6.65 in U.S. dollars. What a bargain! I bought one.
That got me thinking about purchasing power parity. I normally think of that as being something applicable to rich countries versus poor countries. But even between two rich countries, Canada and the United States, it applies. The price was so low, presumably, because of labor costs. Surely the ingredients were roughly the same price in the United States and Canada.
No big insight: Just interesting compared to my priors.
