Critically evaluate the following statement. "It's better to make people wait in line than it is to make them have to pay more for the product."
What will be an ideal response?
The true cost of purchasing anything is not just the price paid for the product or the service but the opportunity cost of time for the consumer. Making people wait in line may actually increase the total cost of acquiring the good beyond what the customer may have paid if the price had risen to its equilibrium level.
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Oligopolistic firms tend to make large economic profits over time because
A. they have complete control in the market to charge any price they want. B. they produce at a point that is allocatively efficient. C. they charge higher than average total cost prices. D. they are productively efficient and produce the least costly way.
What kind of problem do creditors lending funds to a sole proprietorship form of business face?
Refer to the graph shown. An effective price ceiling at $3 causes producer surplus to:
A. increase from 80 to 110. B. fall from 80 to 30. C. fall from 120 to 30. D. increase from 30 to 120.
Natural disasters often cause shortages of critical supplies. What outcomes would neoclassical and behavioral economics typically predict from these events?
A. Both would expect prices to rise significantly, whether from market forces or from self- interest overwhelming any sense of compassion for others. B. Both would expect sellers to keep prices unchanged, whether to keep customers happy long-term or out of a sense of fairness. C. Neoclassical economists would expect economic chaos and collapse, while behavioral economists would expect everyone to act cooperatively. D. Neoclassical economists would expect prices to rise dramatically as a natural result of the greater scarcity, and behavioral economists would expect prices to increase less or not at all as people try not to take advantage of the situation.