Question

Steve buys a new coat from Don's clothing store. If workers in Sean's mill, where Mary buys her material, get raises, the cost of Steve's coat will go up. What economic term does this example describe?

a) Demand
b) Supply
c) Elasticity
d) Inflation

Answer 1

The economic term describing increased cost of Steve's coat due to workers at Sean's mill getting raises, leading to higher material costs for Don's store, is inflation.

Step-by-step explanation:

The economic term that describes the scenario where the cost of Steve's coat may increase due to the workers in Sean's mill getting raises, leading to an increase in the cost of material that Don's clothing store buys, is inflation. Inflation refers to the general increase in prices and fall in the purchasing value of money. When the cost of production rises due to higher wages, this may lead to higher prices for consumers if the increased costs are passed on by the producer.

The economic term that is described in this example is Elasticity. Elasticity measures the responsiveness of quantity demanded or supplied to changes in price or income. In this case, if the workers in Sean's mill get raises, it will increase the cost of material for Mary, which will then increase the cost of Steve's coat from Don's clothing store.