If bagels and cereal are substitutes, then the cross-price elasticity of demand between bagels and cereal will be:
A. greater than zero.
B. less than zero.
C. greater than one.
D. less than one.
Answer: A
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Consider a good that you do not like at all, perhaps turnips. Given the market price for turnips, what would be your consumer surplus?
What will be an ideal response?
As macroeconomic conditions improve and consumers' incomes and wealth increase, their demand for many products tends to become ________ price inelastic. As such, the ability of firms to mark up price above cost will ________
A) more; increase B) more; decrease C) less; increase D) less; decrease
Which of the following is true about the consumer price index (CPI) and the GDP price index? a. Both measures weigh prices by quantities consumed in some base year
b. Both yield identical numbers for price level changes for any two years. c. Both CPI and GDP price index underestimate changes in the price level in an economy. d. The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services. e. CPI includes products that are widely used, while GDP price index includes all goods and services.
Disinflation occurs when
A. the rate of inflation rises. B. the rate of inflation declines. C. the price level declines. D. the price level stays the same.