If the Cost of Transportation Increases by 20 Percent,then,other Things

question 173

Multiple Choice

If the cost of transportation increases by 20 percent,then,other things the same,the CPI is likely to increase by about

• A)0.3 percent.
• B)1.6 percent.
• C)3.2 percent.
• D)10 percent.

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Definitions:

Network Effects

The phenomenon whereby a product or service gains additional value as more people use it.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the average cost per unit of output decreases with increasing scale.

Monopolist

A sole provider of a particular good or service in a market, possessing the power to control prices and exclude competition.

Price Maker

A firm or entity that has significant control over the price of the goods or services it provides, due to lack of competition.