The producer price index is considered a good predictor of future consumer prices because increases in input prices:
A. eventually make it to consumers when they buy the final product.
B. are accounted for in PPI, and therefore this automatically adjusts the CPI.
C. are observed first in the PPI, adjusting the CPI downward.
D. are used by consumers to make decisions on what to buy.
A. eventually make it to consumers when they buy the final product.
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The behavior of people in government
A) can be explained or understood by applying the same principles we use to predict the behavior of people in business. B) is different from the behavior of people in business because the former aims at the general welfare rather than private welfare. C) is essentially different from market behavior. D) is not compatible with the existence of a market system. E) serves to balance private-sector behavior.
Behavioral economists accept that people ___________ their well-being but sometimes ________________.
A. try to maximize; make mistakes B. try to minimize; maximize it C. try to maximize; maximize their bad choices D. try to maximize; purposefully engage in less than optimal behavior.
Which of these types of firms can earn a positive economic profit in the long run?
a. monopolies, but not competitive firms or monopolistically competitive firms b. monopolies and monopolistically competitive firms, but not competitive firms c. monopolies, monopolistically competitive firms, and competitive firms d. No firms earn positive economic profit in the long run. Entry will reduce all firms' economic profit to zero in the long run.
Adam Smith in The Wealth of Nations argued that:
a. society works best when people act unselfishly b. society works best when people act in their own self interest c. society works best when people act as if they are invisible to others d. the social order needs the guidance of the government's visible hand e. none of the above