One tenet of classical economics is that
A) the role of the government should be limited, since the market will always be self-correcting.
B) the government should set a minimum wage slightly above the natural market equilibrium rate.
C) the government should intervene whenever necessary to avoid any unemployment.
D) wages and prices are "sticky downward."
A
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If the single restaurant in an Eastern Kentucky town is currently charging a price for its ham and eggs where the demand is unit elastic, its marginal revenue for ham and eggs is
A) negative. B) positive. C) zero. D) maximized. E) undefined.
If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket, then
A) changes in the CPI are unrelated to the true rate of inflation. B) changes in the CPI understate the true rate of inflation. C) changes in the CPI overstate the true rate of inflation. D) changes in the CPI accurately reflect the true rate of inflation.