If the Parity Ratio Goes from 0

question 129

Multiple Choice

If the parity ratio goes from 0.8 to 0.7, it means that the prices received by farmers had

• A) fallen by 12.5 percent relative to the prices they paid.
• B) fallen by 10 percent relative to the prices they paid.
• C) risen by 12.5 percent relative to the prices they paid.
• D) risen by 10 percent relative to the prices they paid.

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Definitions:

Temporal Discounting

In decision making, the greater weight given to the present over the future.

Certainty Effect

A cognitive bias where people give greater weight to outcomes that are certain, compared to outcomes that are only probable.

Reactance

An inspired response to propositions, individuals, guidelines, or policies that challenge or remove certain freedoms of behavior.

Risk Aversion

In decision making, the greater weight given to possible losses than possible gains.