Samantha goes to the grocery store to make her monthly purchase of ginger ale. As she enters the soft drink section, she notices that the price of ginger ale has increased 15 percent, so she decides to buy some peppermint tea instead. To which problem in the construction of the CPI is this situation most relevant?
a. substitution bias
b. introduction of new goods
c. unmeasured quality change
d. income effect
a
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Suppose that a firm can produce its output at either of two plants. If profits are maximized, which of the following statements is true?
A) The marginal cost at the first plant must equal marginal revenue. B) The marginal cost at the second plant must equal marginal revenue. C) The marginal cost at the two plants must be equal. D) all of the above E) none of the above
Which of the following can serve as a barrier to entry?
a. legal restrictions b. patents c. control of scarce inputs or resources d. all of the above
If the supply curve of the fringe in the oligopoly market is highly elastic:
a. the dominant firm will command a higher share of market output. b. the price chosen by the dominant firm will be high. c. the dominant firm's profit will be lower. d. the market price for the commodity will be low.
Which of the following is most likely to help the residents of a nation produce more goods and services and achieve higher income levels?
a. higher tax rates b. a higher rate of investment c. a smaller trade sector d. greater use of taxation to transfer income from the rich to the poor