Which one of the following statements is FALSE?
A) Generally, what matters most to consumers is what a good costs in dollars.
B) The relative price of a good is its price measured relative to the price of other goods.
C) The nominal price of a good is its price measured in current dollars.
D) When the price of beer goes up by the same proportion as the prices of all other goods, the relative price of beer does not change.
Answer: A
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As a strategy to boost enrollment, in January 1996, a private college in Iowa offered free tuition for graduating high school seniors from the county where it is located. For students who accepted the offer, how did this offer affect the opportunity cost of attending college?
A. The opportunity cost did not change, since lost earnings were still a factor. B. The opportunity cost became zero for the typical student. C. The opportunity cost was very low, because the only cost was for books and supplies. D. The opportunity cost did not change, since tuition was not a factor in computing opportunity cost. E. The opportunity cost was lower than if tuition was charged, but there was still a cost.
Two countries, Alpha and Beta, have identical production possibilities frontiers illustrated above. If Alpha produces at point a and Beta produces at point b, then ________
A) Beta's economic growth rate will exceed Alpha's B) Alpha consumes less than Beta today, but it will grow faster than Beta C) Alpha's and Beta's economic growth rates will be the same D) Beta's future consumption will be greater than Alpha's
The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. If paper production is 4 tons per week, the outcome is ________
A) efficient because marginal benefit equals marginal private cost B) efficient because private and external costs are accounted for C) inefficient because only marginal external benefits are accounted for D) inefficient because marginal social cost exceeds marginal social benefit
Which of the following governmental expenditures are not included in gross domestic product?
a. The construction of federal buildings b. Social Security payments c. Salaries for senators d. Purchases of new defense weapons