If a good's price is volume sensitive, the consumer will:
A. choose the bundle on the budget line that lies on the lowest indifference curve.
B. choose the bundle on the budget line where the budget line is "kinked."
C. choose a boundary solution.
D. choose the bundle on the budget line that lies on the highest indifference curve.
D. choose the bundle on the budget line that lies on the highest indifference curve.
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According to New Keynesians, an increase in which of the following will tend to cause the inflation rate to increase?
A) firms' average inflation adjusted per-unit costs of production B) anticipated future inflation C) an unexpected increase in aggregate demand D) all of the above
The burden of a tax falls entirely on buyers if ________
A) the price elasticity of demand is zero (perfectly inelastic) B) the price elasticity of demand is greater than 1 C) the income elasticity of demand is high D) the price elasticity of supply is unitary elastic
The downward slope of the demand curve is attributed to:
a. the inverse relationship between price and quantity demanded. b. the direct relationship between income and quantity demanded. c. the direct relationship between price and quantity demanded. d. the inverse relationship between income and quantity demanded. e. the direct relationship between consumer preferences and quantity demanded.
The Bureau of Labor Statistics does not try to account for quality changes in the goods and services in the basket used to compute the CPI
a. True b. False Indicate whether the statement is true or false