Assume the CPI increases from 110 to 121, and Manny's nominal income increases from $100,000 to $120,000 over the same period. Manny's real income has
A. Decreased by approximately 8 percent.
B. Increased by approximately 12 percent.
C. Remained the same.
D. Increased by approximately 9 percent.
Answer: D
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The reason a brand name item (e.g., Tyson chicken) has a larger price elasticity than a class of items (e.g., chicken) is that:
A. there are fewer substitutes for chicken generally than for Tyson chicken. B. the share of income spent on "chicken" is larger than spent on "Tyson Chicken". C. it takes a lot of time to adjust to a substitute brand of chicken. D. there are fewer substitutes for Tyson chicken than for chicken generally.
The above figure shows the total revenue curve for Dizzy Discs. The demand curve for CDs sold by Dizzy Discs
A) has negative slope. B) has positive slope. C) is horizontal. D) is vertical.
Medicare
A) subsidizes the care of older people, which gives them NO incentive to consume more medical services. B) subsidizes the care of older people, which gives them an incentive to consume more medical services. C) subsidizes the care of young people, which gives them an incentive to consume less medical services. D) subsidizes the care of middle aged people, which gives them an incentive to consume more medical services.
Two goods, X and Y, are called complements if
a. an increase in PX causes more Y to be bought. b. an increase in PX causes less Y to be bought. c. an increase in PY causes less Y to be bought. d. an increase in income causes more of both X and Y to be bought.