If There Are Only Two Goods in the Economy, One

question 106

Multiple Choice

If there are only two goods in the economy, one whose price rises by 8% and one by 10%, it is possible that inflation is:

• A)2%
• B)8%
• C)10%.
• D)9%

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Definitions:

Opportunity Loss

The loss of potential gain from other alternatives when one alternative is chosen.

Decision Maker's Profit

Reflects the gains realized by a decision maker after considering all costs and revenues associated with their decision.

Expected Monetary Value(EMV)

A financial concept used in decision-making to calculate the average outcome of future events, taking into account the probabilities and impacts of various possible outcomes.

State of Nature

A term referring to the possible outcomes or conditions in decision making that are not under the control of the decision-maker.