Per capita income is a measure of purchasing power. People who live and work in developing countries often find that their incomes are meager when buying an international airline ticket, making an international phone call, sending an airmail letter to a friend who lives abroad, buying a book published by an international publisher, or importing consumer goods. They don’t feel that poor when they buy vegetables at the local store, get a haircut, travel domestically by train, bus, or even by taxi, or buy a local textbook. Use these intuitive comments to understand what a traded good is and what a nontraded good is. Note that a potentially tradable good may become effectively nontraded because of import or export restrictions. Why are nontraded goods generally cheaper in poor countries? In addition, if they are cheaper, would their incomes look better (relative to the United States, say) when measured by the exchange-rate method or by the PPP method?