List three different price indices and explain how they differ in terms of the market basket on which they are based
What will be an ideal response?
Three examples of price indices are the GDP deflator, the consumer price index, and the producer price index. All three differ by the kinds of goods that are contained in the market basket that is used to calculate the average level of prices. The GDP deflator is based on the average price of all final goods and services produced. The consumer price index is based on the average price of 211 goods/services purchased by the typical urban family of four. The producer price index is based on the prices received by producers of goods and services at all stages of the production process.
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If two countries are very different in relative factor abundance, then empirical support for which of the following would less likely?
A) the Factor Price Equalization Theorem B) the Heckscher-Ohlin Theorem C) the Law of One Price D) the Law of Demand E) the Gravity Theorem
An economic rent is created when
(a) organized labor pushes its members' wages above those of unorganized labor. (b) market forces determine prices and output. (c) businesses take market prices as given. (d) laborers accept competitive wages.