Suppose that the due to technological innovations, the absolute price of a recordable CD declines by 25% while the absolute price of a recordable cassette tape declines by 10%. In this situation, the price of the CD relative to the price of a tape
a. falls.
b. rises.
c. remains the same.
d. changes unpredictably.
a. falls.
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
The main policy making body of the Federal Reserve System is the
A) Federal Monetary Conditions Board. B) Board of Presidents of the Federal Reserve Banks. C) Board of Governors of the Federal Reserve System. D) Federal Open Market Committee. E) Board of Advisors.
Answer the following statements true (T) or false (F)
1. If there are many firms in an industry, then it must be a purely competitive market. 2. The basic difference between pure competition and monopolistic competition is in the number of firms in the industry. 3. Competitive firms are price takers largely because of intensive advertising by their competitors. 4. For a purely competitive firm, the demand curve facing it is the same as its marginal revenue curve. 5. In pure competition, the industry demand curve is infinitely price elastic.
Assume the union contract wage exceeds the market-clearing wage. If there is an increase in the labor supply, then the number of unemployed workers will ______ and the number of employed workers will _______.
1) increase; increase 2) decrease; increase 3) increase; decrease 4) increase; not change