When the Prices of Final Goods and Services Increase More

question 27

Multiple Choice

When the prices of final goods and services increase more quickly than the prices of inputs:

• A) the prices of some inputs are sticky.
• B) labor costs are increasing.
• C) producers are making short-run decisions.
• D) technology is improving.

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Definitions:

Hamburger

A popular food item consisting of a cooked patty of ground meat, usually beef, placed inside a sliced bread roll or bun.

MUa/Pa

A ratio used in economics to represent the marginal utility of a good (MUa) divided by its price (Pa), indicating the additional satisfaction gained per unit of spending.

MUb/Pb

A concept from economics that compares the additional utility gained from consuming one more unit of a good (MUb) to its price (Pb), often used in optimal consumption analysis.

Maximizing Utility

The economic principle that individuals seek to achieve the highest level of satisfaction possible from their consumption of goods and services, given their income and the prices of those goods and services.