Suppose the Price of a Gallon of Ice Cream Rises

question 54

Multiple Choice

Suppose the price of a gallon of ice cream rises from $4 to $5 and the price of a can of coffee rises from $2 to $2.50.If the CPI rises from 150 to 177,then people likely will buy

• A)more ice cream and more coffee.
• B)more ice cream and less coffee.
• C)less ice cream and more coffee.
• D)less ice cream and less coffee.

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Definitions:

Agricultural Price Floors

Government-imposed limits on how low prices can fall for agricultural products, aimed at stabilizing farmers' incomes.

Surplus

The situation in which the quantity of a good supplied exceeds the quantity demanded at a specific price.

European Union

A political and economic union of 27 European countries that participate in a single market allowing free movement of goods, services, capital, and people.

Supply Curve

A graphical representation showing how the quantity of a good that producers are willing to supply changes as the price of the good changes.