Substitution bias:
a. overstates the rise in a consumer’s true cost of living.
b. understates the rise in a consumer’s true cost of living.
c. overstates the decrease in a consumer’s true cost of living.
d. understates the decrease in a consumer’s true cost of living.
a. overstates the rise in a consumer’s true cost of living.
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Which of the following relationships is likely to exhibit negative correlation?
A) The relationship between inflation in the U.S. and traffic congestion in China B) The relationship between amount saved with a bank and the interest earned C) The relationship between the amount of precipitation in a year and the number of umbrellas sold D) The relationship between level of professional training and unemployment
Exit from a market will stop when
A) accounting losses are zero. B) the cost of capital is equal to the risk-free rate of return. C) economic losses are zero. D) none of these choices.
If people start to buy more expensive fuel-efficient cars rather than cheaper SUVs, even though the additional cost of fuel-efficient cars is greater than the savings in gas over the life of the car, this would be explained by which of the following types of models?
A. Empirical models using regression analysis B. Path-dependent models C. Heuristic models using traditional building blocks D. Heuristic models using behavioral building blocks
People acting in their own self-interest is the basis of the:
A. principle of supply and demand. B. principle of voluntary exchange. C. real-nominal principle. D. principle of scarcity.