For a person to keep his real income steady at a certain level from one year to the next, his nominal income must
A. stay the same as the price index rises.
B. rise as fast as the price index.
C. rise if the price index falls.
D. fall if the price index rises.
Answer: B
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Modern economists measure how much utility Fred gets from a hot dog by
A. asking Fred how many utils he gets from its consumption. B. examining the price of the hamburger Fred chose not to buy. C. asking Fred how much of some other good he would give up to get the hot dog. The “other good” can be any good except money. D. asking Fred how much of some other good he would give up to get the hot dog. The “other good” can be any good, including money.
The monopolist and the perfect competitor differ in that
A. they face different demand curves. B. the monopolist does not always produce at an output in which MC = MR. C. the monopolist is always a large firm. D. the monopolist is more efficient.
If the price of gasoline increased by 10% and consumers responded by purchasing 10% less gasoline, the absolute value of price elasticity of demand for gasoline would equal
A. 0.1. B. 1. C. 10. D. 0.5.
The demand and supply curves shown in the diagram below represent which of the following changes? \
a. an increase in demand and an increase in the equilibrium price b. a decrease in demand and a decrease in the equilibrium price c. a decrease in demand and a decrease in the quantity supplied d. an increase in the quantity demanded and an increase in supply e. an increase in the supply and an increase in the equilibrium price