Why do fads often lead to shortages, at least in the short term?
A. Demand increases too quickly and unexpectedly for the supply to keep up.
B. Laws prevent stores from responding to excess demand in time to prevent a shortage.
C. Buyers and sellers are unable to agree on a price for the good.
D. Manufacturers charge such high prices for the goods that stores are unwilling to pay.
Ans: A. Demand increases too quickly and unexpectedly for the supply to keep up.
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Which of the following is one of the most important causes for the recent increase in income inequality in China?
a. The introduction of free markets while imposing restrictions on internal migration b. The introduction of regulations that do not allow families to have more than one child c. Globalization d. The increase in pollution as a result of industrialization e. Tougher government controls on the banking system
Draw a graph showing a short-run average variable cost curve, a short-run average total cost curve, and a short-run marginal cost curve. Briefly explain the shape of each curve and how they relate to each other.
What will be an ideal response?
Sarah buys little stuffed animals for $5 each. They come in different varieties. If the producer stops making (retires) a certain variety, a stuffed animal of that variety will be worth $100; otherwise it is worth $0. There is 50% chance that any variety will be retired. What is the value to Sarah of knowing ahead of time whether a variety will be retired?
A) $50 B) $5 C) $2.50 D) $0
What was very unusual about the 2001 recession, was that consumer spending ________________________.
Fill in the blank(s) with the appropriate word(s).