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.

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Definitions:

Exposure Therapy

A psychological treatment designed to help individuals face and gain control of fears and distresses by facing them in a controlled and safe environment.

Systematic Desensitization

Systematic desensitization is a therapeutic technique used to reduce phobic responses by gradually exposing the individual to the fear-inducing object or situation.

Psychodynamic Therapy

A therapeutic approach that emphasizes understanding the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experiences.

Behavior Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through conditioning and reinforcement.