In Felixania,cat Food Constitutes 45 Percent of the Typical Basket

question 162

Multiple Choice

In Felixania,cat food constitutes 45 percent of the typical basket of goods for a typical consumer,dog food constitutes 3 percent,and all other goods constitute the remaining 52 percent.Assume the price of cat food rises by 4 percent,the price of dog food falls by 10 percent,and the prices for all other goods remain constant.Based on the information given,we can definitely say

• A) because all consumers are the same,all consumers must be worse off as a result of the change.
• B) because the goods included in the consumer price index (CPI)necessarily change from year to year,we can't determine the value of the new CPI.
• C) if consumers get a 4 percent pay raise,they are worse off in terms of their real income compared to inflation as measured by the Felixanian consumer price index (CPI).
• D) if consumers get a 4 percent pay raise,they are better off in terms of their real income compared to inflation as measured by the Felixanian consumer price index (CPI).
• E) menu costs have decreased.

---

Definitions:

Concrete Operations

A stage of cognitive development identified by Piaget, where children can think logically about concrete objects and events.

Mutual Exclusivity

The assumption, often made by children learning language, that words or phrases refer to entirely separate and non-overlapping categories.

Fast Mapping

The process by which children learn new words and concepts with minimal exposure.

Logical Extension

The process of deducing or inferring additional outcomes or conclusions based on the logical progression of an established premise or understanding.