Suppose someone told you that the chain-weighted price index for GDP in a country was 135. Why does this fact not convey much information to you?
What will be an ideal response?
We do we have any price index information from any other years. So while we have a measure of "relative prices," we don't know what this measure is relative to.
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Graphically, producer surplus is the area under the
A) demand curve and above the supply curve, up to the relevant quantity. B) price and above the demand curve, up to the relevant quantity. C) price and above the supply curve, up to the relevant quantity. D) price and above the quantity axis, up to the relevant quantity. E) demand curve and above the price, up to the relevant quantity.
If the customer moves first, with a low price what is the best response of the shopkeeper
a. Accept the low price b. Walk away from the deal c. Throw the haggling customer out of your store d. Shut down your store
As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that:
a. cities could raise revenue by increasing bus fares. b. the demand for bus travel is price elastic. c. bus travel and automobile travel are complements. d. bus travel is an inferior good.
If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience
A) stagflation. B) long-run economic decline. C) hyperinflation. D) an increase in the natural rate of unemployment.