You Know That the Consumer Price Index (CPI)at the Beginning

question 22

Multiple Choice

You know that the consumer price index (CPI) at the beginning of this year was 250 and the rate of inflation was 14 percent; this would mean the

• A) price of cat food increased by exactly 14 percent.
• B) CPI at the beginning of last year was 215.
• C) price of dog food probably fell.
• D) CPI at the end of the year was 285.
• E) rate of inflation next year will be more than 14 percent.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a product and the quantity of the product that consumers are willing to purchase.

Price Elasticity

A measure reflecting how demand for a particular good shifts with adjustments in its pricing.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers at those prices, typically downward sloping.

Total Revenue

The total income a firm receives from the sale of its products, calculated by multiplying price by quantity sold.