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Hatshy [7]
3 years ago
11

1. The level of prices and the value of money Suppose the price level reflects the number of dollars needed to buy a basket of g

oods containing one cup of tea, one biscuit, and one magazine. In year one, the basket costs $10.00. In year two, the price of the same basket is $9.00. From year one to year two, there is _____ at an annual rate of ______. In year one, $80.00 will buy __________ baskets, and in year two, $80.00 will buy baskets. This example illustrates that, as the price level falls, the value of money __________.
Business
1 answer:
EleoNora [17]3 years ago
6 0

Answer:

Deflation; 10%

8; 9 basket of goods

rises

Explanation:

Given that,

Price of  a basket of goods in year 1 = $10

Price of the same basket in year 2 = $9

There is a fall in the price level from year 1 to year 2, hence, this is known as the deflation in an economy.

Deflation rate:

= [(Price of  a basket of goods in year 1 - Price of the same basket in year 2) ÷ Price of  a basket of goods in year 1] × 100

= [($10 - $9) ÷ $10] × 100

= 10%

In year 1,

$80.00 will buy:

= $80 ÷ Price of  a basket of goods in year 1

= $80 ÷ $10

= 8 baskets of goods

In year 2,

$80.00 will buy:

= $80 ÷ Price of  a basket of goods in year 2

= $80 ÷ $9

= 8.9 or 9 baskets of goods

Therefore, this example indicates that as the price of the goods falls then as a result the value of money rises because with the lower price level, a person can purchase more quantity of goods.

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3 years ago
When the cross price elasticity between good X and other related goods is positive and very low firm X can be assumed to have?
geniusboy [140]

Answer:

c. a significant amount of market power 

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If the cross price elascitiy is postive, the goods are subsituites.

If the cross price elasticity is negative, the goods are complementary goods.

If the cross price elasticitiy is low the firm has market power. It means that it's consumers do not change the quantity demanded when the price of the good changes

If the cross price elasticitiy is high, the market has low market power.

I hope my answer helps you.

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3 years ago
Read 2 more answers
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