Great minds think alike.  Unless you asked one of these questions.


Question:
  I am working out the expenses to enjoy a holiday in Perth. My budget is tight.  How much does a Big Mac cost in Perth? Alternatively, how much would a Cheeseburger Meal Deal put me back?
Answer:  A single Big Mac costs $4.95 (AUS) in PerthMay we suggest a Cheeseburger Meal Deal at $4.45 (AUS). This is based on a meal including a small fries and small coke.  Perhaps you could get them to hold the cheese.  If things are that tight you should probably holiday at home, and make your own burgers.
Big Mac Tax Invoice

Question:
Are there two Perthís in AustraliaI visited Perth last month, and saw absolutely nothing of the stuff you talk about.    It was a small town with a population of 2000.

Answer:   Correct. There is another Perth located in the Australian state of Tasmania.  Sorry about your holiday.  

Where on Earth is Perth?
There are nine communities named Perth spread around the world. To avoid any further cases of mistaken identity, here is a complete list of known Perth's.
State/Province/Region Country
Western Australia Australia
Tasmania Australia
Perthshire Scotland
Ontario Canada
New Brunswick Canada
Kansas USA
North Dakota USA
North West South Africa
Mahaica-Berbice Guyana

Question:  Why are you guys so obsessed with postcards showing how many other countries you can fit within your state borders? 

Answer:   We live in a vast state, and provide these size comparisons to assist tourists in calculating travel times.  It is much easier to appreciate the size of Western Australia, when you can visualize your own country tucked away on one of our sandy beaches.  We are always trying to maximise the number of independent nations we can fit into our state, so if you have just attained self-governance please let us know.    

Could you fit in here?
Big Mac Index 
 

The Big Mac Index (BMI) is essentially an exchange rate for Big Macs.  It demonstrates the Big Mac purchasing power of your currency, compared to another currency.  When you compare this Big Mac Rate to the currency exchange rate,  you can determine if your currency is under or overvalued.  We can also suggest which direction a currency may move in the future.

Big Macs are used as the basic denominator, because everybody knows how to sink their teeth into them. 

Using the BMI we can study how effectively exchange rates equalise the price of Big Macs around the world.  We assume that Big Macs are identical across the world, and everybody pays a fair price in their own currency for them.  We would expect that no matter where you devoured your Big Mac, the currency exchange rate should equalise the price.   Any price variations between countries would suggest a relative under or overvaluation of a currency.

These are very broad assumptions, but necessary if we are to use the BMI as a global benchmark. 

 
The Bottom Line.

In Perth a Big Mac costs $4.95.

In the USA a Big Mac costs $4.10.

Perth BMI = Perth PRICE/USA PRICE = 4.95/4.10 = 1.21

So Australians pay $1.21(AUS) for every $1(US) an American pays for a Big Mac.  Compare this to the currency exchange rate of say $0.95(AUS) for $1(US).

The Australian currency exchange rate is stronger than the Big Mac rate.  According to the theory, the Australian Dollar is overvalued when compared with the US Dollar.

The Australian Dollar is overvalued by 27.37%. [CALCULATED BY (1.21-0.95)/0.95 * 100%].  

We would expect the Australian Dollar to move towards the Big Mac rate of $1.21.
 
Car

Question:  I have just negotiated an exciting deal to export over 100 left hand drive Ford Mustangs to Perth.  Can you offer me any advice?

Answer:  Convert them to right hand drive, otherwise you'll be running head on into problems and traffic.  We choose to drive on the left hand side of the road in Australia.

 

Question:  Do kangaroos still hop down your main street?

Answer:   Despite what you have heard, the answer is definately no. Ever since the introduction of our inner city Free Transit Zone (FTZ), they prefer to catch the bus service at no expense. 
A kangaroo waiting for a bus.
 

 

Question:  Can you recommend a good place to stay while in Perth?

Answer:   Life On Perth is still waiting to be bribed by a major hotel, or even a budget one with no windows.  However, when we go exploring the South West Region of our state, we choose to stay at the Abbey Beach Resort in Busselton.

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