A hurricane destroyed the peach crop in South Carolina. Shortly thereafter the price of peaches rose significantly. These events suggest that a(n):
a. decrease in the supply of peaches caused the price of peaches to rise.
b. increase in the supply of peaches caused the price of peaches to rise.
c. increase in demand caused the price of peaches to rise.
d. decrease in demand caused the price of peaches to rise.
a
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If the value of a cable TV franchise is uncertain, too much may be bid for the franchise. This is an example of
a. moral hazard b. an authority relation c. the winner's curse d. the principal-agent problem e. adverse selection
In its most basic form, globalization has existed ever since:
a. the creation of the Internet, which enables people to sell their products overseas. b. the end of World War II. c. the creation of the International Monetary Fund (IMF), which establishes the rules for all countries to follow as they trade. d. the fall of the Berlin wall which marked the end of communism and thus, the beginning of truly "global" times. e. primitive societies began to engage in trade.
A monopolist maximizes profits by setting the quantity where:
A. marginal revenue is equal to marginal cost. B. marginal revenue is greater than marginal cost. C. marginal revenue is less than marginal cost. D. total revenue is as high as possible.
If the inverse demand curve a monopoly faces is p = 100 - 2Q, MC is constant at 16, and the government imposes an $8 per unit specific tax on the monopoly, the deadweight loss due to both the monopoly and the tax is
A) $529. B) $1332. C) $1764. D) $441.