The producer price index is considered a good predictor of future consumer prices because increases in input prices:
A. eventually make it to consumers when they buy the final product.
B. are accounted for in PPI, and therefore this automatically adjusts the CPI.
C. are observed first in the PPI, adjusting the CPI downward.
D. are used by consumers to make decisions on what to buy.
A. eventually make it to consumers when they buy the final product.
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The law of increasing opportunity cost says that:
A) opportunity costs of production always tend to increase. B) increases in wages cause increases in the opportunity costs of production. C) as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater. D) along a production possibilities curve, as output increases in the production of one good, the opportunity costs of additional units of the other good will be less and less.
Harvey Morris bought dishes and pitchers made of blue glass during the Great Depression at a flea market. He later resold these items on eBay. The profits Harvey earned from these sales are
A) not economic profits because Harvey did not add value to the items but took advantage of the buyers who were not aware of how much Harvey paid for the items. B) the result of arbitrage. C) accounting profits but not economic profits. D) subject to a retail profits tax.