One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI:
A. uses current year quantities of goods and services.
B. includes separate market baskets of goods and services for both base and current years.
C. includes only goods and services bought by typical urban consumers.
D. is bias free.
Answer: C
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In practice, it is usual to assume that, in explaining the impact of a change in interest rates ________
A) the substitution effects outweigh the income effects B) the income effect outweighs the substitution effect C) the income and substitution effects cancel out with one another D) the income effect increases the severity of the substitution effect
You are more likely to hire a plumber to repair a leaky drain pipe
a. as the tax rate on your earned income rises b. if you already own the specialized tools required to complete the plumbing repair work c. following an increase in the opportunity cost of your time d. the more knowledge and experience in plumbing repair work that you possess e. as the transaction cost of entering into a plumbing contract increases due to government regulations
Suppose that ABC Industries, a perfectly competitive firm, currently produces 500 units of imitation ham spread for a total cost of $1,500 . The marginal cost of the 500th unit is $20, and the marginal revenue of the 500th unit is $15 . To maximize profits, Cheapo Industries should:
a. continue to produce 500 units. b. produce more than 500 units but less than 1500 units. c. produce less than 500 units. d. produce more than 1500 units. e. stop producing at 500 units.
In an oligopoly, the price effect is:
A. the increase in price from lowering the quantity sold. B. the decrease in total revenue that occurs because the increase in quantity will push the market price down. C. the increase in output that comes from raising the price. D. the increase in total revenue due to the money brought in by the sale of additional units.