What Are the Items Included in the CPI's "Market Basket

question 110

Multiple Choice

What are the items included in the CPI's "market basket" chosen to represent?

• A) goods and services bought by the business sector
• B) the cost of government-supplied goods and services
• C) goods and services bought by the average consumer
• D) all goods and services produced by domestic businesses

---

Definitions:

Inelastic Demand

A situation where the demand for a product or service does not significantly change in response to price changes, indicating consumers' strong need or preference for the product.

Sensitive to Price

Sensitive to price describes a situation where demand for a product is highly affected by changes in its price.

Maximize Profit

The primary goal of businesses to achieve the highest possible profit margin by optimizing revenue while minimizing costs.

Fixed Costs

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance premiums, providing stability in budgeting and planning.