The introduction of the video cassette recorder in the 1970s exemplified a problem in measuring the cost of living; that problem is the problem of
a. substitution bias.
b. product-improvement bias.
c. introduction of new goods.
d. unmeasured quality change.
c
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Economists assume people's choices
A) are inherently random. B) are the result of greed. C) cannot be predicted. D) conflict with the actions or interests of everyone else. E) create options for other people.
Complete this statement. Sellers compete against other sellers and
A) sellers compete against buyers. B) sellers cooperate with buyers. C) buyers cooperate with other buyers. D) both A and C are true.
An increase in the interest rate would induce people to
A) sell shares of stock and buy bonds, but would have no effect on their desire to hold money. B) get rid of all their money and buy stocks with it. C) sell their least liquid assets and hold more money in case interest rates go up again. D) hold a smaller fraction of their wealth in the form of money.
In the perfectly competitive market, all firms in the market are assumed to be producing:
a. identical products. b. differentiated products. c. products that are heavily advertised. d. complementary products.