Suppose the price of a six-pack of cola rises from $3 to $3.75 and the price of a pack of mints rises from $1.25 to $1.75.If the CPI rises from 140 to 182,then people likely will buy
A)more cola and more mints.
B)more cola and fewer mints.
C)less cola and more mints.
D)less cola and fewer mints.

Question

Quizplus · Accepted Answer

The CPI (Consumer Price Index) is a measure of the average change in prices over time for a basket of goods and services. In this case, the CPI has increased from 140 to 182, which means that the overall price level has increased by 29.29%. The price of a six-pack of cola has increased by 25%, and the price of a pack of mints has increased by 40%. This means that the price of mints has increased more than the price of cola, so people are likely to buy more cola and fewer mints.

Suppose the Price of a Six-Pack of Cola Rises from $3