DVD writers allow people to record TV shows in a high-quality format. They entered the market in 2002 at a price of $1000. By 2003, they were under $500. By the time they become part of the CPI market basket they are likely to be less than $250. Economists will argue that this type of issue
A. is well handled the by the BLS as they determine the CPI.
B. leads to the CPI overstating the rate of inflation.
C. leads to the CPI understating the rate of inflation.
D. is irrelevant to CPI calculations.
Answer: B
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Which of the following goods is likely to have a derived demand?
a. Tractor b. T-shirt c. Italian food d. Residential buildings e. Cigarettes
If the demand curve facing a monopoly was 1 unit at $7, 2 units at $6, 3 units at $5, 4 units at $4, and 5 units at $3, at the point along the curve where 3 units are being sold, the elasticity of demand: a. is greater than one
b. is equal to one. c. is less than one. d. cannot be determined from the above information.
In Table 10.1, what is the unemployment rate in Year 1?
A. 50 percent B. 41.7 percent C. 16.7 percent D. 8.3 percent
If aggregate supply decreases and aggregate demand remains unchanged
A. there will be no systematic relationship between the price level and the level of aggregate output. B. there will be a negative relationship between the price level and the level of aggregate output. C. the price level will remain unchanged, but aggregate output will decrease. D. there will be a positive relationship between the price level and the level of aggregate output.