If the Ratio of Price of Cloth (PC) Divided by the Price

question 26

Multiple Choice

If the ratio of price of cloth (PC) divided by the price of food (PF) increases in the international marketplace, then

• A) world relative quantity of cloth demanded will decrease.
• B) world relative quantity of cloth supplied will increase.
• C) world relative quantity of cloth supplied and demanded will decrease.
• D) world relative quantity of cloth supplied and demanded will increase.
• E) world relative quantity of food will increase.

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Definitions:

Total Utility

The total satisfaction or benefit received by consuming a particular amount of a good or service.

Marginal Utility

The extra pleasure or benefit gained by a consumer from using an additional unit of a product or service.

Utility-maximizing

Refers to the economic principle where individuals or households attempt to get the highest level of satisfaction from their resources.

Income

The money received, especially on a regular basis, for work or through investments.