You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought, and that this will cause the price of peanuts to double by the end of the year. As a result,
a. your demand for peanut butter will increase, but not until the end of the year.
b. your demand for peanut butter increases today.
c. your demand for peanut butter decreases as you look for a substitute good.
d. you will wait for the price of jelly to change before altering your demand for peanut butter.
Answer: b. your demand for peanut butter increases today.
You might also like to view...
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
The major change in American labor markets this century is
A) the steady rise of the unemployment rate. B) the steady rise of the employment rate. C) the increase in the labor-force participation rate. D) the increase in the female labor-force participation rate.
The decision not to acquire information because the cost of acquiring the information exceeds the expected benefit from the information is known as
A) rational ignorance. B) the principle of minimum differentiation. C) public choice theory. D) inefficient provision.
What is the economies of scope character for a firm that has a straight-line product transformation curve?
A) Economies of scope (SC > 0) B) Diseconomies of scope (SC < 0) C) SC = 0 D) SC = 1