Assume that a consumer has a given budget or income of $12, and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. Refer to the information given above. If the consumer spent all of her
budget on just apples or just bananas, how many apples or bananas maximum would she be able to buy?
A. 12 apples or 8 bananas
B. 8 apples or 12 bananas
C. 16 apples or 12 bananas
D. 8 apples or 16 bananas
Answer: D
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The price elasticity of demand coefficient for gourmet coffee is estimated to be equal to 1.6 . It is expected, therefore, that a 10% increase in price would lead to:
a. a 16% decrease in the quantity of gourmet coffee demanded. b. a 16% increase in the quantity of gourmet coffee demanded. c. an 8% decrease in the quantity of gourmet coffee demanded. d. an 8% increase in the quantity of gourmet coffee demanded.
The Consumer Price Index (CPI) relies on the calculation of:
A. prices of a fixed basket of goods that does not change often. B. prices of a variable basket of goods that changes frequently. C. the components of GDP that change annually. D. the components of GDP that do not change frequently.
Related to the Economics in Practice on p. 6: According to the Economics in Practice, ________ of the $10 retail value of a Barbie doll is captured in the United States.
A. none B. 35 cents C. $2 D. $8
What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?
A. The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC B. Capital flight reduces investment opportunities and the need for saving in DVCs C. There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving D. The domestic output of DVCs is so low that the absolute volume of saving is small