If a market basket of goods cost $100 in the base year and $125 in a later year, then average prices have increased by:
A. 25 percent.
B. 80 percent.
C. 125 percent.
D. 225 percent.
A. 25 percent.
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The Herfindahl-Hirschman Index is calculated by ________
A) adding the market share of each firm in the market and squaring the resulting number B) squaring the market share of each firm competing in the market and then summing the resulting numbers C) adding the number of firms in the market and squaring the resulting number D) adding the profit earned by each firm in the market
In one sense ________ appears surprising since it means that the bank is not ________ its portfolio of loans and thus is exposing itself to more risk
A) specialization in lending; diversifying B) specialization in lending; rationing C) credit rationing; diversifying D) screening; rationing
Identify the correct statement. a. In periods of low inflation, real wages are constant but nominal wages decline
b. If the price level increases, real wages will increase. c. If the price level increases, nominal wages will fall. d. In periods of high inflation, real wages change even if nominal wages remain constant. e. If the inflation rate is high, real wages and nominal wages change by the same amount.
Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through WindowQuick Burger Does NotOperate Drive-Through WindowQuick Burger$24,000$15,000The Sunshine Café$11,000$23,000Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome?
A. The Sunshine Café pays Quick Burger $10,500 per month not to operate the drive-through window. B. Quick Burger pays The Sunshine Café $10,500 per month to operate the drive-through window. C. The Sunshine Café pays Quick Burger $12,500 per month not to operate the drive-through window. D. Quick Burger pays The Sunshine Café $12,500 per month to operate the drive-through window.