Related to the Economics in Practice on page 318: A company selling iced tea discovers that as sugar is added to tea, customers' opinions of the taste of the tea rises for the first few grams of sugar and then drops. Even so, the company chooses not to add the amount sugar that would result in the best-tasting tea. Which of the following would explain why adding less sugar could be a wise decision?
A. Teas with less sugar are more likely to appeal to health-conscious consumers.
B. Many products in the cold drink market are sold with substitutes for sugar, such as high fructose corn syrup.
C. Manufacturers of tea are required to clearly indicate the amount of sugar in their products.
D. The price of sugar added to tea is much less significant than the price of other ingredients, such as tea leaves.
Answer: A
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The purchase of 500 shares of Honda stock by the California State Employees' Pension fund
A) is counted as consumption expenditure. B) is not counted as part of GDP. C) is counted as investment in the GDP accounts. D) is counted as part of export expenditure in the GDP accounts because Honda is a foreign firm. E) is counted as part of import expenditure in the GDP accounts because Honda is a foreign firm.
The aggregate supply curve indicates the:
a. relationship between prices and the aggregate quantity of goods and services purchased by consumers, investors, governments, and foreigners (net exports). b. relationship between prices and the natural rate of unemployment. c. relationship between the real wage rate and the quantity of labor supplied by households. d. quantity of goods and services producers will supply at different price levels.