We often witness prices of water, gasoline and construction materials surge in a region just before a major storm hits. Some call this "price gouging." In the economic way of thinking, however, those higher prices are caused by
A) an increase in supply and an increase in demand.
B) an increase in supply and a decrease in demand.
C) a decrease in supply and an increase in demand.
D) a decrease in supply and a decrease in demand.
E) practices that are not connected to underlying supply and demand conditions.
C
You might also like to view...
In the market depicted in the above figure, if a single-price monopoly maximizes its profit, which area shows the consumer surplus?
A) area GHIL B) area HIJ C) area HJKG D) area NFL
Which of the following anti-inflation policies imposes costs on society?
A) price controls B) indexation C) reduced growth in nominal demand D) all of these
States with no-fault automobile insurance have lower crash fatality rates than states with ordinary automobile insurance
Indicate whether the statement is true or false
Suppose that the marginal cost of an additional ton of steel produced by a Japanese firm is the same whether the steel is set aside for domestic use or exported abroad
If the price elasticity of demand for steel is greater abroad than it is in Japan, which of the following will be correct? A) The Japanese firm will sell more steel abroad than they will sell in Japan. B) The Japanese firm will sell more steel in Japan than they will sell abroad. C) The Japanese firm will sell steel at a lower price abroad than they will charge domestic users. D) The Japanese firm will sell steel at a higher price abroad than they will charge domestic users. E) Insufficient information exists to determine whether the price or quantity will be higher or lower abroad.