The "new product bias" in the consumer price index refers to the idea that
A) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers.
B) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers.
C) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers.
D) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers.
C
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Consider the prisoner's dilemma model where two criminals have two options (confess or deny), and each criminal must make their decision without speaking to the other criminal first
If they both confess they each get 3 years, if only one confesses then he gets 1 and his partner gets 10, and if neither confesses then they each get 0. They are in fact both guilty. In this game, the Nash equilibrium is where A) both confess. B) neither one confesses. C) only one will confess. D) It is impossible to say.
An externality can be a cost or benefit arising from the production of a good that falls upon
A) consumers but not producers. B) producers but not consumers. C) both the consumer and the producer. D) someone other than the consumer or producer.
The Coase theorem applies when property rights are given
A) to the victim of pollution but not to the polluter. B) to the polluter but not to the victim. C) to either the polluter or the victim. D) neither to the polluter nor to the victim.
The use of tax penalties to control pollution represents a
a. price-based market approach to the pollution problem. b. non-market approach to the pollution problem. c. major source of current federal revenues. d. pollution-rights solution to the pollution problem.