The price of a phone call at a pay phone was 5 cents in 1950 and the price of a first-class stamp was 3 cents. In 2016, the pay phone costs 50 cents for a call and a first-class stamp costs 47 cents. We know that
A. all prices increased from 1950 to 2016: Nominal prices of phone calls, first-class stamps, and the relative prices of phone calls and first-class stamps.
B. both the nominal and the relative price of phone calls increased from 1950 to 2016.
C. both the nominal prices of phone calls and first-class stamps increased from 1950 to 2016, but we can't tell if the relative prices increased or decreased without more information.
D. both the nominal prices of phone calls and first-class stamps increased from 1950 to 2016, but the relative price of stamps increased and the relative price of phone calls decreased from 1950 to 2016.
Answer: D
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Which of the following is NOT true regarding competitive markets?
Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy's discovery is
a. physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce. b. physical capital. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer. c. technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas less scarce. d. technological knowledge. If Amy's discovery leads to lower natural gas prices, it has made natural gas scarcer.
A market for pollution rights can be expected to:
A. produce a shortage of pollution. B. eliminate all pollution. C. encourage potential polluters to increase emissions. D. provide potential polluters with a monetary incentive to reduce emissions.
Wilbur's Widgets, a widget company, produces 100 widgets. Its average fixed cost is $6 and its total variable cost is $400. The total cost of producing 100 widgets is
A. $306. B. $400. C. $600. D. $1,000.