Give examples of the stickiness of prices based on the average number of months between price changes for selected goods and services
What will be an ideal response?
Economic data indicates that there are many inflexible prices for goods and services. For example, coin-operated laundry machines take an average of about 46 months to experience price changes. Newspapers and haircuts are other examples of final goods and services that experience price change lags of more than 24 months. By contrast, there are many final goods and services that exhibit extremely flexible prices. The price of gasoline tends to change about every 0.6 months, on average. Airline tickets are another example of a service that changes in price very rapidly-about once a month.
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If tax rates were 100 percent, tax revenues would be _____
a. maximized b. minimized c. indeterminate d. the same if they were 50 percent
The free-rider problem is encountered when
A) someone benefits from the consumption of a public good without paying his or her full share. B) all individuals who consume a public good pay for it. C) all goods consumed and produced are private goods. D) all individuals are willing to pay for what they consume.
The federal government's principal tool in altering consumer spending is changing
a. corporate income taxes. b. federal sales taxes. c. unemployment insurance benefits. d. personal income tax rates.
Changes in the value of stocks may play a big role in the consumption decisions of individuals. How would changes in the stock market affect the consumption function?