The value of commodity money:
a. fluctuates because its value is compared with the price of the commodity in international markets.
b. fluctuates because its base commodity market value is flexible
c. remains stable because a particular commodity always yields the same level of utility.
d. remains constant because the production of the commodity used as money is restricted to limited hands.
b
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The law of demand states that, all else held constant,
A. price and quantity demanded are inversely related. B. the larger the number of buyers in a market, the lower the product price will be. C. consumers will buy more of a product at high prices than at low prices. D. price and quantity demanded are directly related.
Adam Smith wrote in his book "The Wealth of Nations" that competition ________ the entrepreneur.
A. distracts B. shapes C. regulates D. motivates
The "new product bias" in the consumer price index refers to the idea that
A) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers. B) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers. C) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers. D) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers.
Which of the following statements is correct?
A) The markup pricing rule that is derived from the rule for profit maximization can be used as a substitute for determining the profit-maximizing level of output by equating marginal revenue and marginal cost. B) It is reasonable to assume that a profit-maximizing firm will never operate in the inelastic portion of its demand curve. C) The ability of a profit-maximizing firm to mark up price above average cost is unaffected by the price elasticity of demand for the firm's output. D) The markup factor and the price elasticity of demand are positively related, i.e., as the price elasticity of demand increases, the markup factor that the profit-maximizing firm can apply to its marginal cost in setting price increases as well.