Suppose there are only two goods: guns and roses. In Los Angeles, the absolute price of roses is 50 dollars per dozen. If the relative price of roses in terms of guns is 1 guns per dozen roses, then the absolute price of guns is
a. 5 dollars per gun.
b. 2 cents per gun.
c. 50 dollars per gun.
d. 50 cents per gun.
c. 50 dollars per gun.
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If high level of corruption in a country deters foreign investment in worthy projects, this is known as
A) portfolio investment. B) moral hazard. C) foreign direct investment. D) adverse selection.
Your friend notices that U.S. auto production and U.S. population growth have moved together over several decades. He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production. You gently point out to him that he
a. is correct only when the economy is in a recession b. has mistakenly inferred causation from observed correlation c. has ignored secondary effects d. has committed the fallacy of composition e. is correct only when the United States enjoys economic growth
Opportunity cost may be defined as the
A. Dollar cost of producing a particular product. B. Goods or services that are forgone in order to obtain something else. C. Dollar prices paid for final goods and services. D. Difference between wholesale and retail prices.
The income elasticity of demand for food is roughly 1. A consumer's monthly income is $2,000, of which 20 percent is spent on food. If the income of this consumer doubles, the amount she'll spend on food will be:
A. $400 per month B. $500 per month C. $800 per month D. $1000 per month