Explain why a consumer may be willing to drive 20 miles to save 10% on a $3 gallon of milk, but is not willing to drive the same 20 miles to save 3% on a $500 refrigerator.
What will be an ideal response?
In assessing numerical changes, the brain appears to be naturally inclined to work in percentage or relative terms rather than absolute terms. Saving 10% seems better than saving 3%, even though the 10% saving on the gallon of milk amounts to only $0.30, whereas the 3% saving on the refrigerator amounts to $15.
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In comparing monopoly to a perfectly competitive market, which of the following is false?
A) Market price will be higher under monopoly. B) Equilibrium quantity will be higher under perfect competition. C) Consumers will be worse off with the monopoly. D) Employment will be higher under monopoly.
The monetary-policy framework called inflation targeting is used explicitly by
a. no major country. b. most major countries except the United States and Japan. c. the United States, but it is not used by other major countries. d. most major countries, including the United States and Japan.
When the economy is on the flat part of the AS curve, there is very little crowding out of planned investment.
Answer the following statement true (T) or false (F)
When a program is means-tested, it means that
A. It is a social insurance program. B. The target efficiency is high. C. It is an in-kind program. D. To be eligible, the recipient must have little income.