Consumers in Beachland consume only two goods, sodas and DVDs. If they spend $10 on sodas and $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9?
A) 9 sodas and 1 DVD
B) 1 soda and 9 DVDs
C) 10 sodas and 9 DVDs
D) 10 sodas and 10 DVDs
E) It is impossible to determine the market basket without information on the quantity of at least one of the two goods consumed.
D
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Indicate whether the statement is true or false.
The theory of rational expectations concludes that
A. the public's expectations can influence the outcome of monetary policy, but not of fiscal policy. B. the public's expectations can influence the outcome of fiscal policy, but not of monetary policy. C. the public's expectations as to the effects of economic policies will tend to reinforce the effectiveness of those policies. D. by reacting in its self-interest to the expected effects of stabilization policy, the public will tend to negate the impact of those policies.
Answer the following statement(s) true (T) or false (F)
1.The multiplier effect causes the ultimate increase in total purchases to be greater than the initial increase. 2.The marginal propensity to consume is the fraction of additional disposable income that a household consumes rather than saves. 3.The 2008–2009 recession was the mildest recession since the Great Depression. 4.Since the 1930s, economic stabilization policies have focused primarily on the supply side of the economy. 5.Economist Arthur Laffer invented a graphic demonstrating the effect of tax rates on government revenue.
Which of the following will not cause the marginal revenue product of labor curve for a firm to shift?
A) an increase in the productivity of workers B) an increase in demand for the product C) a decrease in the price of the product D) an increase in the wage rate