Which is likely to have the larger effect on the CPI, a 2 percent increase in the price of food or a 3 percent increase in the price of diamond rings? Explain
The 2 percent increase in the price of food will increase the CPI by more because the portion of the market basket consisting of food is much larger than the portion consisting of diamond rings.
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In 2012 a severe drought raised the price of corn. For a farmer in Canada who harvested a normal crop because the farm was not affected directly by the drought, the increase in the price of corn
A) increases the farmer's producer surplus. B) decreases the farmer's producer surplus. C) does not affect the producer surplus because this change is a movement along the farmer's supply curve and not a shift of the farmer's supply curve. D) increases producer surplus only if the farmer's supply is completely inelastic.
What is the return on a 5 percent coupon bond that initially sells for $1,000 and sells for $1,200 next year?
A) 5 percent B) 10 percent C) -5 percent D) 25 percent