Suppose There Are Only Two Goods: Lettuce and Grapes

question 7

Multiple Choice

Suppose there are only two goods: lettuce and grapes.In California,a head of lettuce sells for 50¢ and a bunch of grapes sells for $1.In Nebraska,25¢ must be added to these absolute prices to cover transportation costs.How do these transportation costs affect the relative prices of lettuce and grapes?

• A) The transportation costs do not affect the relative prices of lettuce and grapes.
• B) The relative prices of lettuce and grapes are both higher when transportation costs are added.
• C) The addition of transportation costs makes the relative price of grapes higher and the relative price of lettuce lower.
• D) The transportation costs raise the relative price of lettuce but lower the relative price of grapes.

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Definitions:

Sustainable Marketing

Marketing efforts that not only meet the company's needs but are also environmentally and socially responsible to benefit communities and future generations.

U.S. Marketers

Professionals in the United States who specialize in marketing, focussing on strategies and techniques to promote and sell products or services.

Bottom-line

The final total of an account, balance sheet, or financial result, often referring to a company's earnings or profits.

Ethics

Moral principles that govern a person's behavior or the conducting of an activity, often applied in professional and business environments.