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41) The law of demand includes the statement "other things being equal." These other things include all of the following EXCEPT

A) the price of the good itself.

B) the price of related goods.

C) incomes.

D) tastes.

 

42) Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand?

A) Yes, since she is buying less hamburger at a lower price.

B) Yes, since she is buying less hamburger in a relatively short period of time and we wouldn't expect her tastes to have changed.

C) No, since the law of demand refers to relative price changes and the price of hamburger falling is an absolute price change.

D) No, since other things are not held constant, such as her income.

43) Suppose all prices increase by 10 percent in the year while the total sales of HDTVs remain constant. This is

A) a violation of the law of demand since fewer HDTVs should be purchased at a higher price.

B) a violation of the law of demand since more HDTVs should have been purchased with higher incomes.

C) not a violation of the law of demand since the relative price of HDTVs did not change.

D) not a violation of the law of demand since the law of demand does not apply to expensive goods like HDTVs.

 

44) The price of a commodity in terms of another commodity is

A) the law of demand.

B) a substitute.

C) the money price.

D) the relative price.

 

45) The price that we observe in the market is

A) the law of demand.

B) a substitute.

C) the money price.

D) the relative price.

 

46) The absolute price of a good is its

A) relative price.

B) money price.

C) subjective price.

D) projected price.

47) The "real" price of a good is known as

A) the absolute price of the good.

B) the dollar price of the good since we use dollars in the United States.

C) relative price of the good.

D) the price actually paid for a good instead of the sticker price.

 

48) Jane has noticed that she used to pay $2 for coffee and now she pays $2.50. Which of the following statements is TRUE?

A) The relative price of coffee has increased compared to tea.

B) The money price of coffee has increased.

C) The law of supply explains why the price of coffee has increased.

D) Jane will stop consuming coffee.

 

49) The price of a first-class stamp in 1957 was 3 cents, and it is 49 cents in 2014. From this we know that

A) both the relative and the absolute price of first-class stamps increased from 1957 to 2014.

B) the money price of first-class stamps increased from 1957 to 2014 but the absolute price of first-class stamps stayed constant.

C) the money price of first-class stamps increased from 1957 to 2014 and the relative price of first-class stamps decreased.

D) the money price of first-class stamps increased from 1957 to 2014, but we can't tell if the relative price of first-class stamps increased or decreased without more information.

50) The price of a phone call at a pay phone was 5 cents in 1950 and the price of a first-class stamp was 3 cents. In 2014, the pay phone costs 50 cents for a call and a first-class stamp costs 49 cents. We know that

A) both the nominal and the relative price of phone calls increased from 1950 to 2014.

B) both the nominal prices of phone calls and first-class stamps increased from 1950 to 2014, but the relative price of stamps increased and the relative price of phone calls decreased from 1950 to 2014.

C) all prices increased from 1950 to 2014: Nominal prices of phone calls, first-class stamps, and the relative prices of phone calls and first-class stamps.

D) both the nominal prices of phone calls and first-class stamps increased from 1950 to 2014, but we can't tell if the relative prices increased or decreased without more information.

 

 

 

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