What is the significance of the Mac Index in determining the cost of living in different cities around the world?

The Big Mac Index is a tool used to compare the cost of living in different cities by looking at the price of a Big Mac burger. It provides a simple way to understand the relative value of currencies and the purchasing power in different countries. By comparing the price of a Big Mac in various locations, economists can analyze exchange rate disparities and assess the cost of living differences between cities.