To compare GDPs over time, we may want to adjust for the effect of inflation; therefore,
a. real GDP is converted into nominal GDP by subtracting the inflation rate from real GDP
b. nominal GDP is converted into real GDP by subtracting the inflation rate from nominal GDP
c. nominal GDP is converted into real GDP by dividing nominal GDP by the GDP deflator, then multiplying by 100
d. nominal GDP is divided by the inflation rate, then multiplying by the price index
e. the ratio of the consumer price index to the GDP deflator is multiplied by the real GDP
C
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If two bundles are on the same indifference curve, then
A) the consumer derives the same level of utility from each. B) the consumer derives the same level of ordinal utility from each but not the same level of cardinal utility. C) no comparison can be made between the two bundles since utility cannot really be measured. D) B and C.
Concerning the maximization of output subject to a cost constraint, which of the following statements (if any) are true?
a. At the optimal input combination, the slope of the isoquant must equal the slope of the isocost line. b. The optimal solution occurs at the boundary of the feasible region of input combinations. c. The optimal solution occurs at the point where the isoquant is tangent to the isocost lines. d. all of the above e. none of the above
Product differentiation:
a. is carried out by both perfectly competitive and monopolistically competitive firms. b. is succesful if a firm faces a relatively inelastic demand curve. c. does not allow the firm to raise its price without losing all of its customers. d. cannot be accomplished through advertising or trivial product changes. e. if carried out successfully enables the firms to enjoy market power.
Price cap regulation involves
A) setting the monopoly's price equal to its average total cost. B) setting the monopoly's price equal to its profit-maximizing price. C) setting a maximum price the monopoly may charge. D) assuming a natural monopoly will not charge a higher than profit-maximizing price. E) setting the monopoly's price equal to its marginal cost.