IKEA Prices Essay Example | Topics and Well Written Essays - 500 words

IKEA Prices - Essay Example If not, in which country is the product cheaper than it is in the United States. In which country is it more expensive? The prices of IKEA products are not identical and vary in different countries after converting the price in USD. For comparing the prices of IKEA 365 + Gnistra Bread Knife, three different countries have been chosen namely Australia, Canada and United States. Among these three countries, USA has the cheapest price which is 12.99 USD. After converting the price in USD, the price of 365 + Gnistra Bread knife of Canada has become 17.4532 USD and in Australia the figure is 18.2721 USD. So, Australia’s cost for this particular product is expensive compared to other two countries (IKEA Systems, 2011). Question 2 What might be the reason for the prices to differ even after conversion to U.S. dollars? Individual product costs differ from one country to another. The conventional reasons for difference in price level are the exchange rates and prices of labor. Wage dis tribution at mean level has significant negative effect on product prices. The high currency conversion rate of various countries is related with higher prices. The high income generating countries enjoy large productivity advantage (Lipse & Swedenborg, 2007). Trade cost can determine the cost of product.