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Cost of a big mac in rmb5/5/2023 By contrast, the Mini Mac shows the dollar slightly undervalued-2.7 percent on average (small fries). The Big Mac shows the dollar overvalued against most currencies, by an average of 32 percent (a whopper). As explained in the video here, this fact helps equalize prices.Īs shown in the graphic at the top, the Mini Mac Index suggests that the law of one price holds far better than does the Big Mac Index. Minis are a global product that, unlike Big Macs, can move quickly and cheaply around the world. So in 2013 we created our own Mini Mac Index, which compares the price of iPad minis across countries. The Big Mac is a global product, identical across borders, which makes it an interesting one for this purpose.īut the law of one price assumes there are no restrictions on, or costs involved in, the movement of goods, and Big Macs travel badly. dollars), to measure the extent to which various currencies are over- or under-valued. The Economist magazine’s Big Mac Index uses the price of McDonald’s Big Macs around the world, expressed in a common currency (U.S. But how well does it actually hold internationally? The “law of one price” holds that identical goods should trade for the same price in an efficient market. The guest commentary below was written by Benn Steiland Benjamin Della Rocca from the Council on Foreign Relations.
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