Possible sources of an upward bias in the CPI include the
a. quantity adjustment bias.
b. substitution bias.
c. new products bias.
d. Both b and c
e. All of the above
D
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Refer to Figure 2-2. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production?
A) 24 dozen orchids B) 48 dozen orchids C) 60 dozen orchids D) 74 dozen orchids
Refer to Figure 4-3. At the equilibrium price of P1, consumers are willing to buy Q1 pounds of granola. Is this an economically efficient quantity?
A) Yes, because marginal cost is zero at the price of P1. B) No, the marginal cost of the last unit (Q1 ) exceeds the marginal benefit of the last unit. C) Yes, because P1 is the price where marginal benefit equals marginal cost. D) No, the marginal benefit of the last unit (Q1 ) exceeds the marginal cost of that last unit.