Suppose lawn mowers are part of the market basket used to compute the CPI. Suppose also that the quality of lawn mowers deteriorates while the price of lawn mowers stays the same. If the Bureau of Labor Statistics is able to precisely adjust the CPI for the improvement in quality, then, other things equal,
a. the CPI will rise.
b. the CPI will fall.
c. the CPI will stay the same.
d. lawn mowers will no longer be included in the market basket.
a
Economics
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Explain the following statement: "People hate taxes primarily because of income effects while economists hate taxes primarily because of substitution effects."
What will be an ideal response?
Economics
Which of the following statements about elasticity measures is true?
A. Elasticities are always positive values. B. Values that are close to zero indicate greater responsiveness. C. Values that are further from zero indicate greater responsiveness. D. Values that are further from zero indicate less elasticity.
Economics