The "new product bias" in the consumer price index refers to the idea that
A) consumers switch to new goods when the prices of old goods increase, and the CPI overestimates the cost to consumers.
B) consumers switch to old goods when the prices of new goods increase, and the CPI underestimates the cost to consumers.
C) consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the cost to consumers.
D) new products' prices often decrease after their initial introduction, and the CPI is adjusted infrequently and overestimates the cost to consumers.
Answer: D
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Both the long-run and short-run aggregate supply curves will shift when
A) the endowments of the factors of production change. B) the government increases defense spending. C) an event occurs which is expected to last only a short period of time. D) they are both upward sloping.
The Cobb-Douglas production function is: Q = 1.4*L0.6*K0.5 . What would be the percentage change in output (%?Q) if labor grows by 3.0% and capital is cut by 5.0%? [HINT: %?Q = (EL * %?L) + (EK * %?K)]
a. %?Q = + 3.0% b. %?Q = + 5.0% c. %?Q = - 0.70% d. %?Q = - 2.50% e. %?Q = - 5.0%
Use the following table to answer the question. Dave's Production Possibilities ScheduleSimon's Production Possibilities SchedulePounds of Green BeansPounds of CornPounds of Green BeansPounds of Corn0160080201204060408080406040120208001600Assume Dave consumes 40 pounds of green beans and 80 pounds of corn without trade. Also, assume that Simon consumes 80 pounds of green beans and 40 pounds of corn without trade. Suppose Simon and Dave specialize and that the terms of trade are 1 pound of green beans for 1 pound of corn. If Simon sells Dave 80 pounds of green beans, then the gains from trade for Dave are ________ pounds of green beans and ________ pounds of corn with trade and specialization.
A. 20, 20 B. 0, 40 C. 40, 0 D. 40, 40
Refer to the accompanying table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out?Units of ActivityTotal CostTotal Benefit0$0$01$2$122$6$223$12$304$20$365$30$406$42$427$56$43
A. 4 B. 2 C. 3 D. 5