How do markets respond to price ceilings and price floors? Do attempts to repeal the laws of supply and demand meet their objectives?
What will be an ideal response?
Attempts to repeal the laws of supply and demand usually backfire and sometimes produce results virtually the opposite of those intended. Where rent controls are adopted to protect tenants, housing grows scarce because the law makes it unprofitable to build and maintain apartments. When price floors are placed under agricultural products, surpluses pile up because people buy less.
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Which of the following is NOT an event that causes BOTH the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve to shift?
A) a change in an economy's endowments of the factors of production B) a change in an economy's labor supply C) a temporary change in the price of a key input D) technological changes
A ________ is the price at which a trading partner is indifferent between making the trade and not doing so
A) market value B) reservation value C) shadow value D) discounted value
Pender Pet Products is considered an opportunistic importer because the firm seeks products around the world that it can import and sell profitably to domestic consumers.
a. true b. false
Proponents of fixed exchange rates argue that the predictability of the fixed exchange rate:
A. allows monetary policy to be used to stabilize the domestic economy. B. decreases trade and economic integration. C. increases trade and economic integration. D. prevents exchange rate overvaluation.