Sherri lives in Canada and is considering buying a new sofa.If the price level in Canada falls and the price level in the United States does not change,Canadian manufactured sofas are relatively
A)more expensive,so Sherri will likely purchase a U.S.manufactured sofa.
B)more expensive,so Sherri will likely purchase a Canadian manufactured sofa.
C)less expensive,so Sherri will likely purchase a U.S.manufactured sofa.
D)less expensive,so Sherri will likely purchase a Canadian manufactured sofa.
E)Both answers B and D could be correct depending on whether U.S.manufactured sofas were initially more expensive or less expensive than Canadian sofas.

Question

Quizplus · Accepted Answer

If the price level in Canada falls, Canadian manufactured sofas will become relatively less expensive compared to before, assuming the price level in the United States remains constant. Therefore, Sherri is more likely to purchase a Canadian manufactured sofa. Choice E is incorrect, as the initial prices of U.S. manufactured sofas are not relevant to the question.

Sherri Lives in Canada and Is Considering Buying a New