Related to the Economics in Practice on P

question 264

Multiple Choice

Related to the Economics in Practice on p. 129: Suppose Store ABC runs an ad claiming to have "low prices everyday." They even demonstrate that the total expenditure for a basket of groceries is less at their store than at any of their competitors. Which of the following statements is not true?

• A) You would clearly be better off shopping at Store ABC.
• B) Your preferences may not be consistent with the basket used by Store ABC (in their example), thus it is not clear whether or not you would be better off shopping at Store ABC or not.
• C) Even if your preferences are generally consistent with the basket used by Store ABC, it may still be possible for you to substitute other similar goods for those in the basket used by Store ABC (in their example) and thus spend less at another store.
• D) All of the above statements are true.

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Definitions:

Medicare Taxes

Taxes collected from earnings to fund the Medicare program, which provides health insurance for individuals aged 65 and older in the United States.

FUTA

The Federal Unemployment Tax Act, which imposes a payroll tax on businesses with employees to fund state workforce agencies.

SUTA

State Unemployment Tax Act; a type of payroll tax that employers pay to their state to fund the state's unemployment insurance program.

State Rate

Often refers to the interest rate or tax rate set by individual states, which can vary from one state to another.