If you expect a general price increase of 5% this year and the price of the hamburgers you sell increases by 10%,you would conclude that the relative price of your good has
A)declined, and you would increase your output.
B)declined, and you would decrease your output.
C)increased, and you would increase your output.
D)increased, and you would decrease your output.

Question

Quizplus · Accepted Answer

The relative price of your good has increased because the price of hamburgers increased by 10%, which is higher than the general price increase of 5%. This suggests that hamburgers have become relatively more expensive compared to other goods, potentially leading to an increase in revenue per unit sold, thus incentivizing an increase in output.

If You Expect a General Price Increase of 5% This