True/False: a) If the Consumer Price Index is 125% of the base year in 2006 and...
True/False:
a) If the Consumer Price Index is 125% of the base year in 2006 and 135% of the base year in 2007, the CPI increased by 10% from 2006-2007
b) When Internal Rate of Return is greater than Cost Benefit Ratio we should make the investment
c) Demand curves for non-rival goods are summed vertically
d) For any given good, Willingness to Accept is often larger than Willingness to Pay
Please provide explanation for why its True or False
Homework Answers
A. False
Explanation: The % increase in CPI = (135 - 125)//125 * 100 = 10/125 * 100 = 1000/125 = 8%
B. False
Explanation These two are not compared.
C. True
Explanation: Demand curves for rival goods are summed horizontally and for the non-rival goods it is summed vertically.
D. False
Explanation: For any good, willingness to pay is often higher.
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