Refer to Scenario 3.3 below to answer the question(s) that follow.SCENARIO 3.3: -Mustard and mayonnaise are substitutes. -Mustard and relish are complements. -Mustard is a normal good. -During the summer, about 50% of all mustard was recalled by manufacturers and removed from store shelves.Refer to Scenario 3.3. As a result of the recall, you would expect that
A. the supply of mustard would decrease, the price of mustard would increase, and the quantity demanded of mustard would decrease.
B. the supply of mustard would decrease, the price of mustard would increase, and the demand for mustard would decrease.
C. the price of mustard would increase, the supply of mustard would increase, and the quantity demanded of mustard would decrease.
D. the price of mustard would increase and both the quantity of mustard supplied and the quantity of mustard demanded would increase.
Answer: A
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A wheat farmer who must purchase his inputs now but will sell his wheat at a market price at a future date:
A. is a good example of what the chapter refers to as a speculator. B. would hedge by taking the short position in a wheat futures contract. C. would hedge by taking the long position in a wheat futures contract. D. faces a market risk that cannot be offset.
Many economists note that the shortage of blood in several rare types is, at least in part, attributable to the fact that the price of blood is
A. kept too high. B. fixed at zero. C. right at equilibrium. D. determined by market forces.
Liberalism is founded on a premise that behind a "veil of ignorance,"
a. justice cannot be agreed upon. b. everyone's income should be equal. c. everyone would agree to "just" rules to reallocate income. d. society should maximize the sum of individual utilities.