Describe how prices provide different incentives for buyers and sellers?
What will be an ideal response?
Higher prices for a good or service provide an incentive for buyers to purchase less of that good or service and provide producers with an incentive to make or sell more of it. Lower prices for a good or service provide an incentive for buyers to purchase more of that good or service and provide producers an incentive to make or sell less of it.
You might also like to view...
Which view of the causes of the Great Depression emphasizes the decline in the money supply which caused aggregate demand for goods and services to shrink, leading businesses to cut production and employment?
(a) The Monetarists' (b) The Keynesians' (c) The Austrians' (d) The International View
Banks do not need to keep all of their deposits on hand as reserves because
A) only a fraction of deposits are withdrawn at any one time. B) FDIC protects banks from excessive withdrawal demands. C) there is too much risk of bank robberies. D) they can always generate new reserves through the money creation process.
The Fed's purchases and sales of government securities are called: a. margin operations
b. open market operations. c. small-dealer transactions. d. intermediary transactions.
A perfectly competitive firm has a random marginal cost with a 20 percent chance of a high marginal cost of $20 and an 80 percent chance of a low marginal cost of $5. What is the firm's expected marginal cost?
A) $7 B) $8 C) $10 D) $12