Explain why abrupt changes in farm output have a magnified effect on market prices.
What will be an ideal response?
Abrupt changes in farm output have a magnified effect on market prices because the demand for food is relatively inelastic. To sell an abundant harvest, farmers must cut their prices substantially.
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Aggregate demand is the total demand for intermediate goods and services in an entire economy
Indicate whether the statement is true or false
When Patty uses money to buy her lunch, she is showing the use of money as a "store of value."
Indicate whether the statement is true or false
Which of the following is not correct about most economic models?
a. They are composed of equations and diagrams. b. They contribute very little to economists' understanding of the real world. c. They omit many features of the real-world economy. d. In constructing models, economists make assumptions.
Both screening and signaling:
A. correct inefficiency in the market. B. can increase surplus gained in a market. C. allow more transactions to take place that are valuable to buyers and sellers. D. All of these statements are true.