Employing a fixed-weight index like the Consumer Price Index to adjust a person's salary in response to inflation will overcompensate this person because doing so will allow this person to
A) buy the same bundle of goods as he did before the inflation.
B) achieve a higher level of utility than he did before the inflation.
C) achieve the same level of utility as before the inflation.
D) buy more of all goods.
B
You might also like to view...
Explain how the listed events (a-d) would affect the following at Hilton Hotels
i. Marginal cost ii. Average variable cost iii. Average fixed cost iv. Average total cost a. Hilton decides on an across-the-board 5 percent increase in executive salaries. b. Hilton decides to eliminate all print advertising. c. Hilton signs a new contract with the Culinary Workers Union that requires the company to increase wages for all its kitchen workers. d. The federal government starts to levy a $5 room tax on all hotel rooms.
Total producer surplus is the area below the equilibrium price and above the supply curve
a. True b. False Indicate whether the statement is true or false
The price ceiling causes a
A. shortage of 45 units. B. surplus of 85 units. C. shortage of 85 units. D. surplus of 40 units.
In the space provided in the graph above, draw a demand curve, D1, and then draw a second demand curve, D2, that illustrates a decrease in demand.
