Higher prices lead to higher levels of real wealth
Indicate whether the statement is true or false
FALSE
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The Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar?
A) $10.00 B) 4 machine-made cigars C) $2.50 D) one-quarter of a machine-made cigar
Assume that we have a demand curve of the form: log(Q) = a - b log(P) + c log(I) where Q = quantity, P = price, I = income, and a, b, and c are positive constants
The income and price elasticities for the demand curve represented above are always A) equal to one. B) equal to zero. C) equal (i.e., income elasticity always equals price elasticity). D) constant but not necessarily equal to one another.
If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decrease taxes b. decrease the discount rate c. sell government bonds d. all of the above
Which of the following is false?
A. In general, the deregulation of the airlines and interstate trucking industries led to higher costs and higher prices. B. Since the early 1980s the size of companies acquired in mergers has been getting larger. C. The rule of reason is partially in force today as firms are subject to prosecution if they control 60% of the relevant market and have behaved badly toward their competitors. D. When two firms in the same industry form one larger company it is called a horizontal merger.