In constructing the CPI, the BLS has to deal with commodity substitution bias, which is defined as
A) consumers' substitution of discount stores for full service stores to avoid the higher prices in the full service stores.
B) consumers' substitution of cheaper goods for goods whose prices increase.
C) the bias from quality changes in existing products that cause prices to increase.
D) the bias from new goods being introduced that are more expensive than older goods.
E) the bias that arises because the BLS changes the CPI market basket each month.
B
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The time it takes to pass legislation to implement a particular policy is called
A) the data lag. B) the recognition lag. C) the legislative lag. D) the implementation lag. E) the effectiveness lag.
Suppose the quantity of x is measured on the horizontal axis. If the price consumption curve is vertical when the price of x changes, then the demand for x is
A) perfectly elastic. B) perfectly inelastic. C) unit elastic. D) There is not enough information to determine the price elasticity of demand for x.
Which of the following would be counted as investment when calculating gross domestic product?
a) the purchase of a used computer by an auto manufacturer b) the purchase of a share of IBM stock by an employee c) the construction of a new house d) the construction of roads by the government e) the profit earned when selling shares of stock
If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then:
A. the average variable cost of 10 units is $10. B. the average variable cost of 9 units is $10. C. the marginal cost of the tenth unit is $90. D. the firm is operating in the range of increasing marginal returns.