In Felixania,cat Food Constitutes 45% of the Typical Basket of Goods

question 9

Multiple Choice

In Felixania,cat food constitutes 45% of the typical basket of goods for a typical consumer,dog food constitutes 3%,and all other goods constitute the remaining 52%.Assume the price of cat food rises by 4%,the price of dog food falls by 10%,and prices remain constant for all other goods.Based on the information given,we can definitely say:

• A) because the price of dog food fell by more than the price of cat food rose, the consumer price index (CPI) must have decreased.
• B) the CPI in Felixania is more than in the previous year.
• C) if consumers get a 4% pay raise, they are worse off in terms of their real income compared to inflation as measured by the Felixanian CPI.
• D) because cat food is a luxury (as is dog food), consumers are certainly no worse off in terms of their real wages as measured by the Felixanian CPI.
• E) menu costs have decreased.

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Definitions:

Adaptive Behavior

Actions or skills that allow an individual to adjust to changes in their environment and effectively meet demands and challenges.

Social Behavior

Actions or reactions of individuals or groups in social situations, influenced by the presence and behavior of others.

Ecosystem Level

Describes the hierarchical context within ecology that pertains to the complex interactions and relationships among living organisms and their environment.

Exosystem Level

A term used in ecological systems theory referring to the societal structures and external environments that indirectly influence an individual's development.