The consumer price index for Planet Econ consists of only two items: books and hamburgers. In 2015, the base year, the typical consumer purchased 10 books for $20 each and 200 hamburgers for $1 each. In 2017, the typical consumer purchased 12 books for $23 each and 300 hamburgers for $1.15 each. The consumer price index for 2017 on Planet Econ equals:
A. 1.00
B. 1.45
C. 1.25
D. 1.15
Answer: D
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A good is nonexcludable if no externalities, either negative or positive, are associated with its production or consumption.
Answer the following statement true (T) or false (F)
Negative externalities are costs incurred by: i. buyers ii. sellers iii. someone other than buyers or sellers
a. (i) only b. (ii) only c. (iii) only d. both (i) and (ii)
How do economies of scale contribute to the development of an oligopoly?
A) Economies of scale make it legally difficult for new firms to enter.
B) Economies of scale make small-scale producers inefficient.
C) Economies of scale are based on control of a key resource, without which other firms cannot enter an industry.
D) Economies of scale are guaranteed when a patent is granted.
Refer to the above figure. Suppose the economy had been at point A and now is at B. What could have caused the movement to B?
A. Both the labor force and the population increased. B. Winter storms cause factories in the north to be shut down for several weeks. C. Unusually good weather causes the wheat crop to be larger than normal. D. Government spending increased causing aggregate demand to increase.