Certain goods are related so that an increase in the price of one good decreases the demand for the other. These goods are:
a. complements
b. substitutes.
c. luxury goods.
d. competing goods.
a
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The Phillips curve relates the inflation rate to
a. the unemployment rate. b. GDP. c. disposable personal income. d. the interest rate.
If the interest rate is 7 percent, what is the present value of $100 received two years from now
a. $107 b. $114.49 c. $87.34 d. $93.45
A demand curve shows
A) the willingness of consumers to buy a product at different prices. B) the willingness of consumers to substitute one product for another product. C) the relationship between the price of a product and the demand for the product. D) the relationship between the price of a product and the total benefit consumers receive from the product.
Answer the following statements true (T) or false (F)
1. The "hedonic treadmill" of prospect theory suggests that if people's incomes rise and stay at the new higher level, then their feelings of satisfaction also rise and stay at the new higher level. 2. The anchoring effect suggests that when people are made to think of large abstract numbers before they go shopping, many of them will subsequently be willing to pay higher prices for stuff. 3. The endowment effect makes people value things less when they think of those things as their own as opposed to identical things that are not theirs - as in "grass is greener on the other side". 4. "Loss aversion" helps explain why people buy insurance policies with lower deductibles even though the policies are more expensive. 5. The status quo effect suggests that giving people more options is always good for them.