The consumer price index (CPI) is calculated
a. using a fixed basket of goods and, therefore, will tend to understate inflation.
b. using a fixed basket of goods and, therefore, will tend to overstate inflation.
c. using a constantly changing basket of goods and, therefore, will tend to understate inflation.
d. using a constantly changing basket of goods and, therefore, will tend to overstate inflation.
B
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If demand is given by Q = Ap-b where A and b are positive constants, the absolute value of price elasticity of demand
A) = b. B) = A. C) = A/b. D) depends on the price.
If the opportunity cost of producing wheat in Canada is four buffalo and the opportunity cost of producing wheat in the U.S. is seven sheep then we know that
a. four buffalo must trade for seven sheep b. seven buffalo must trade for three sheep c. we have insufficient information to determine anything about their trade d. the U.S. should specialize in wheat e. Canada should specialize in wheat
If the quantity of a good supplied is highly sensitive to the price of the good, this is illustrated by a
a. demand curve that is relatively flat (more horizontal). b. demand curve that is relatively steep (more vertical). c. supply curve that is relatively flat (more horizontal). d. supply curve that is relatively steep (more vertical).
Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.
Figure 6.1Refer to Figure 6.1. AC represents Tom's budget constraint. Point E then represents a point that is
A. outside his opportunity set but not on his budget constraint. B. available, but at which he does not spend all his income. C. an available option, as Tom is just spending all of his income. D. not available because it represents a combination of hamburgers and hot dogs that he cannot purchase with his income.