Availability of Substitutes
What will be an ideal response?
If there are few substitutes for a good, then even when its price rises greatly, you might still buy it.
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The table above gives the purchases of an average consumer in a small economy. (These consumers purchase only loaves of bread and jugs of soda.) Suppose 2010 is the reference base period
a. What quantities are in the CPI market basket? b. What is the cost of the CPI market basket using 2010 prices? c. What is the cost of the CPI market basket using 2011 prices? d. What is the CPI in 2011?
If a percentage decrease in money supply is followed by a proportional percentage decrease in prices and output, this means that:
a. the velocity of money is constant. b. the economy is in a recession. c. the velocity of money has fallen. d. real GDP is constant. e. the economy is not at maximum capacity
Economies of scale can be caused by all of the following except
a. price discounts for large scale purchases b. labor specialization c. use of more productive equipment d. increases in the firm's average total cost e. more cost-efficient methods of marketing
Automatic stabilizers
A. are probably insufficient to completely offset strong recessionary pressures. B. tend to accelerate abrupt changes in economic activity and cause expenditures to move pro-cyclically. C. give policy makers more time to formulate nondiscretionary policy. D. are unimportant to those workers most likely to be laid off or otherwise harmed by recessions.