You notice that the price of butter falls and then rises. The best explanation for this is that:
A. demand for butter increased causing price to fall, which attracted other firms to enter the market causing supply to increase, which caused the price to go back up.
B. demand for butter decreased causing price to fall, which attracted other firms to enter the market causing supply to increase, which caused the price to go back up.
C. demand for butter decreased causing price to fall, which induced other firms to exit the market causing supply to decrease, which caused the price to go back up.
D. demand for butter decreased causing price to fall, which attracted other firms to enter the market causing supply to decrease, which caused the price to go back up.
Answer: C
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A) the Treasury Department. B) the Federal Reserve. C) the SEC. D) the IRS.
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a. b and e b. price reflects the value society places on the last unit produced c. output will continue to grow until the required subsidy is zero d. fair pricing schemes are more profitable e. subsidization will be necessary
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a. selling price of the last unit of output produced. b. increment of total cost resulting from the use of an additional unit of the resource. c. marginal product of the resource divided by the unit price of the good produced. d. change in total revenue resulting from employing an additional unit of the resource.
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A. lower; lower B. higher; lower C. lower; higher D. higher; higher