In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?
a. education & communication
b. apparel
c. medical care
d. recreation
b
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Use the following table which shows the aggregate demand and aggregate supply schedules for a hypothetical economy to answer the next question.Real Domestic Output Demanded (in billions)Price Level (index value)Real Domestic Output Supplied (in billions)$3,000350$9,0004,0003008,0005,0002507,0006,0002006,0007,0001505,0008,0001004,000The equilibrium price and output levels will be ________.
A. 250 and $7,000 B. 200 and $5,000 C. 300 and $8,000 D. 200 and $6,000
Suppose a drought resulted in a major reduction in the California lettuce crop. In the market for lettuce,
A) the demand curve shifted to the right resulting in an increase in the equilibrium price. B) the supply curve shifted to the left resulting in a decrease in the equilibrium price. C) the supply curve shifted to the left resulting in an increase in the equilibrium price. D) the demand curve shifted to the left resulting in a decrease in the equilibrium price.
What is consumer surplus? Why would policy makers be interested in consumer surplus?
What will be an ideal response?
Economic models do not reflect the full complexity of reality and instead are based on:
A. the fallacy of composition. B. value judgments. C. purposeful simplifications. D. trade-offs.