The price of peanuts drops from 50 cents to 25 cents per pound. How and why might an individual and a group of 1,000 people respond to this price drop very differently?
What will be an ideal response?
A group of 1,000 people would most likely show a significant increase in the buying of peanuts in response to the price drop. Although not everyone in this group would increase their buying of peanuts, enough would to show this increase. However, an individual could very well not buy any peanuts despite the price drop. The individual might not like the taste of peanuts or might be allergic to peanuts.
You might also like to view...
Which of the following is most closely related to the "fair results" approach to fairness?
A) efficient resource use B) having an equal income distribution C) voluntary exchange D) the command system of allocating resources E) price hikes in a natural disaster
Current Federal Reserve policy focuses on interest rates, rather than on monetary aggregates, because ________
A) monetary aggregates do not provide clear or consistent signals to guide policymakers B) open market operations affect interest rates more directly than they affect monetary aggregates C) according to the Fisher effect, the interest rate is a key determinant of the inflation rate D) all of the above E) none of the above
Explain why high priced lawyers may support an industry ban on price advertising for lawyers
What will be an ideal response?
If a pharmaceutical firm is researching ways to improve its heartburn medicine and discovers a technique that will improve its allergy medicine, one could conclude that economies of scope exist in that industry
Indicate whether the statement is true or false