Tall Latt és and the Real Exchange Rate between the Euro and the Dollar. According to the Economist , in early 2004 the average price of a tall latté in Starbucks in the United States was 2.80.Inthecountriesthatusetheeuro,theaveragepricewas2.93euros.Becausetheexchangerateatthistimewas0.79europerdollar,thedollarpriceoflattésintheeuroareawas3.70. (Related to Application.)
a. At what exchange rate between the dollar and the euro would a latté cost the same in the euro area as it did in the United States?