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

question 106

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 the prices for all other goods remain constant.Based on the information given,we can definitely say:

• A) because all consumers are the same, all consumers must be worse off as a result of the change.
• B) because the goods included in the consumer price index (CPI) necessarily change from year to year, we can't determine the value of the new CPI.
• 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) if consumers get at 4% pay raise, they are better off in terms of their real income compared to inflation as measured by the Felixanian CPI.
• E) menu costs have decreased.

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Definitions:

Global Operations

Business activities conducted on an international scale, encompassing the production, distribution, marketing, and sales of goods and services around the world.

New Markets

Expansion areas or segments a business targets to introduce its products or services, aiming for growth and diversification.

Global Operations

The planning, execution, and control of industrial operations across different countries to take advantage of global efficiencies.

Scheduling Decision

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