Suppose that the typical consumer buys one apple and one orange every month. In the base year 1986, the price for each was $1. In 1996, the price of apples rises to $2, and the price of oranges remains at $1. Assuming that the CPI for 1986 is equal to 1, the CPI for 1996 would be equal to:
A. 1/2.
B. 1.
C. 3/2.
D. 2.
Ans: A. 1/2.
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Goods whose production is associated with positive externalities are
a. under-priced and over-provided b. under-priced and under-provided c. over-priced and under-provided d. over-priced and over-provided e. not provided by private markets
As the price of computers falls, the quantity of computers demanded increases. This is an application of:
A. needs versus wants. B. the law of supply. C. the law of demand. D. the production possibilities curve.
The basic truth that underlies the study of economics is the fact that we all face:
A. Death B. Taxes C. Risk D. Scarcity
At any quantity, the marginal factor cost for a monopsonist is always
A. above the labor supply curve. B. parallel to the marginal revenue product. C. below the labor supply curve. D. above the labor demand curve.