Price indexes can overstate inflation because they
A) omit some quality improvements.
B) do not contain the prices of any used goods.
C) do not contain the prices of foreign goods.
D) do not contain the prices of services.
A
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Which of the following examples best describes the Law of Diminishing Marginal Benefit?
A) If a seller of notebooks in a perfectly competitive market charges above the market price, his profit decreases. B) With each additional pen Jill buys, her willingness to pay for another pen decreases. C) Each additional unit of ice cream that John consumes gives him more and more satisfaction. D) If the weather gets cold, the demand for ice cream will fall.
Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be
A) an increase in the price of coffee. B) a decrease in the price of coffee. C) a rightward shift in the demand curve for coffee. D) a leftward shift of the supply curve of coffee.
Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corn farmer in Iowa, who sells his output in the world commodity market, does not. Why is this so?
A) because unlike Microsoft, the wealthy corn farmer is probably a monopolist B) because the wealthy corn farmer is a price taker who chooses his optimal output independently of market price but Microsoft's optimal output depends on the price it selects C) because Microsoft could potentially lose sales if it sets prices indiscriminately D) because Microsoft is large enough to hire the best people in the field
If the inputs to a production process are perfect complements, the firm can choose from a virtually infinite array of combinations of the two inputs to minimize the costs of producing a given level of output
Indicate whether the statement is true or false