The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer’s true cost of living, because it doesn’t take into account that the person can substitute between goods according to changes in their relative prices.

Suppose that the yen-dollar foreign exchange rate changes from 130 yen per dollar to 140 yen per dollar. Then the yen has

A) depreciated against the dollar, and the dollar has appreciated against the yen. B) depreciated against the dollar, and the dollar has depreciated against the yen. C) appreciated against the dollar, and the dollar has appreciated against the yen. D) appreciated against the dollar, and the dollar has depreciated against the yen.

A single-price monopolist will produce at the point where

A) MR = 0. B) MR = P. C) MR = MC. D) P = MC.