In the CPI market basket, the category which has the largest weight is
A. transportation.
B. medical care.
C. food and beverages.
D. housing.
Answer: D
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Why is it important that consumers respond differently to temporary and permanent increases in their incomes?
A) This implies that consumption will be highly sensitive to temporary changes in income. B) This implies that a temporary tax cut will have a larger effect than a permanent one on current consumption. C) this tells us that the timing of income increases for consumers is irrelevant. D) this has implications for the relative effects of temporary and permanent tax cuts.
Suppose that Bill budgets exactly $50 each month for fresh shrimp, regardless of whether shrimp is priced at $10 per pound, or is on sale for $4 per pound. Based on this information, Bill's price elasticity of demand is:
a. 0. b. Cannot be determined. c. 1. d. infinite.
Which is not an example of a liquid asset?
a. cash b. travelers' checks c. a certificate of deposit d. a checking account
If a firm can maximize its profit by producing the output where price is equal to its marginal cost, the firm is operating in:
A. a perfectly competitive market. B. an oligopolistic market. C. a monopolistic market. D. a monopolistically competitive market.