Your Grandfather Tells You That He Earned $7,000/year in His

question 162

Multiple Choice

Your grandfather tells you that he earned $7,000/year in his first job in 1961.You earn $35,000/year in your first job in 2018.You know that average prices have risen steadily since 1961.You earn

• A)5 times as much as your grandfather in terms of real income.
• B)more than 5 times as much as your grandfather in terms of real income.
• C)less than 5 times as much as your grandfather in terms of real income.
• D)less than 5 times as much as your grandfather in terms of nominal income.

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Definitions:

Downsloping Demand Curves

A graph that illustrates the inverse relationship between the price of a good and the quantity demanded by consumers; as price decreases, the quantity demanded increases.

Inelastic Segment

Part of a demand curve where the quantity demanded changes very little with a change in price, indicating consumers' relative insensitivity to price changes.

Maximum Profits

The highest possible financial gain that a company can achieve in a given period while accounting for all costs and expenses.

Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for a good or service, regardless of the demand or cost conditions.