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What the Big Mac creator's legacy has to do with exchange rates
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The average price for a Big Mac burger in Switzerland was 6. As many countries have different currencies, the standardized Big Mac prices are calculated by converting the average national Big Mac prices with the latest exchange rate to U. Its global revenue amounted to about Most McDonald restaurants are spread across the United States.
Average price in U. Download Settings Share. Chart type. Share on Social Media. Bloomberg L. The value of the purchasing power for 1 g of gold Gold. A Swiss bank has expanded the idea of the Big Mac index to include the amount of time that an average local worker in a given country must work to earn enough to buy a Big Mac.
The Big Mac Index - The New York Times
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: 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. In some markets, a high-volume and low-margin approach makes most sense to maximize profit, while in others a higher margin will generate more profit.
Thus the relative prices reflect more than currency values. One other example is that Russia has one of the cheapest Big Macs, even though Moscow is usually near the top on lists of costs for visiting business people. Standard food ingredients are cheap in Russia, while restaurants suitable for business dinners with English speaking staff are expensive. Another limitation of the Big Mac Index is the geographical coverage.
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This is due to the presence of the McDonald's franchise. They no longer prominently advertised Big Macs for sale and the sandwich, both individually and as part of value meals , was being sold for an unusually low price compared to other items.
The Big Mac Index
Guillermo Moreno , Secretary of Commerce in the Kirchner government, reportedly forced McDonald's to sell the Big Mac at an artificially low price to manipulate the country's performance on the Big Mac index. A Buenos Aires newspaper stated "Moreno loses the battle".
The Big Mac and virtually all sandwiches vary from country to country with differing nutritional values, weights and even nominal size differences. Not all Big Mac burgers offered by the chain are exclusively beef. There is a lot of variance with the exclusively beef "Big Mac": On 1 November , all three of the McDonald's in Iceland closed, primarily due to the chain's high cost of importing most of the chain's meat and vegetables, by McDonald's demands and standards, from the Eurozone.
Six most expensive July 18, This statistic shows the most expensive places to buy a Big Mac . Six cheapest July 18, This statistic shows the least expensive places to buy a Big Mac . Six fastest earned July This statistic shows the average working time required to buy one Big Mac in selected cities around the world in Six slowest earned July This statistic shows the average working time required to buy one Big Mac in selected cities around the world in From Wikipedia, the free encyclopedia.