If Individuals Have Money Illusion Then They

question 36

Multiple Choice

If individuals have money illusion then they

• A)think that money is worthless.
• B)ignore the effects on their income or wealth of some price changes in the economy.
• C)they base their production and consumption decisions on relative rather than absolute prices.
• D)Both B and C.

---

Definitions:

Stackelberg Leader

In economic theory, a firm in a duopoly that sets its output level first, influencing the subsequent decision of another firm.

Cournot Duopoly

A Cournot Duopoly is a market structure where two companies control the entire market for a particular product or service, and each firm chooses its output level assuming that the other firm's decision is fixed.

Cournot Duopolists

Firms in a duopoly market structure that determine their output level assuming the output of their competitor is fixed, named after Antoine Cournot.

Demand Curve

A graphical representation showing the relationship between the price of a good and the amount of the good that consumers are willing and able to purchase at various prices.