Concord Piano Company has experienced a sustained pattern of losses because fewer people are buying pianos for their homes. In response, the owner of Concord has reduced the number of pianos it manufactures. Which of the following is suggested by the actions of Concord?
a. Concord is reducing its marginal costs.
b. Concord is preparing to exit the market.
c. Concord has reached the shutdown point.
d. Concord is evaluating its allocative efficiency.
b. Concord is preparing to exit the market.
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Suppose manufacturers introduce a new model car to replace a car currently included in the CPI basket. The price of the new car is 10 percent higher than the discontinued model, but the new car has additional safety features and amenities. In this situation the CPI will tend to ________ inflation as a result of ________ bias.
A. accurately measure; substitution B. overstate; quality adjustment C. overstate; substitution D. understate; quality adjustment
If the price level rises from 100 to 110 then the inflation rate is
A) 100 percent. B) 1.0 percent. C) 10.0 percent. D) 110 percent. E) None of the above answers is correct.
The theory that real shocks to the economy are the primary cause of business cycles is
A) monetarism. B) Keynesian theory. C) real business cycle theory. D) Hamiltonian theory.
Which of the following people purchased the correct asset to meet his or her objective?
a. Michelle wanted to be a part owner of Mamma Rosa's Pizza, so she purchased a bond issued by Mamma Rosa's Pizza. b. Tim wanted a high return, even if it meant taking some risk, so he purchased stock issued by Specific Electric instead of bonds issued by Specific Electric. c. Jennifer wanted to buy equity in Honda, so she purchased bonds sold by Honda. d. All of the above are correct.