Constructing the CPI involves which of the following stages?
i. conducting the monthly price survey
ii. converting the CPI to an international index
iii. selecting CPI market basket
A) i and iii B) iii only C) ii only D) i only E) i, ii, and iii
A
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A firm invests in a new machine that costs $2,000 a year but is expected to produce an increase in total revenue of $2,200 a year. The current real rate of interest is 8%. The firm should
A. undertake the investment, because the expected rate of return of 9% is greater than the real rate of interest. B. not undertake the investment, because the expected rate of return of 7% is less than the real rate of interest. C. undertake the investment, because the expected rate of return of 12% is greater than the real rate of interest. D. undertake the investment, because the expected rate of return of 10% is greater than the real rate of interest.
Bundling
A) is when firms sell multiple separate goods together for a single price. B) is where a firm wraps its fragile goods in special packaging and charges a higher price than if the goods are put into regular packaging. C) increases transaction costs for consumers. D) is illegal in most U.S. states.
The deadweight loss a tax causes depends on all of the following except:
A. how responsive buyers and sellers are to a price change. B. the price elasticity of supply. C. the price elasticity of demand. D. who the tax is imposed upon.
For patents to be effective
A) small networks. B) network externalities must be realized. C) property rights need to be enforced. D) there needs to be fewer economies of scope.