Explain why there is an active market for cola-flavored soft drinks in the United States but there is not an active market for sauerkraut-flavored soft drinks
What will be an ideal response?
There is an active market for cola-flavored soft drinks because there are enough consumers who want these soft drinks and are willing to pay for them. Not enough consumers want sauerkraut-flavored soft drinks, and since they are not willing to pay for these soft drinks, there are no producers making them. This is the principle of consumer sovereignty.
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Fiscal policy refers to changes in
A) the money supply and interest rates that are intended to achieve macroeconomic policy objectives. B) federal taxes and purchases that are intended to fund the war on terrorism. C) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives. D) federal taxes and purchases that are intended to achieve macroeconomic policy objectives.
Diversification involves:
A. investing all your money in one company. B. buying only one kind of stock. C. buying only low-risk bonds. D. None of these statements is true.
Advocates of higher minimum wages for unskilled labor defend their position by arguing that
A. low-income workers deserve to earn incomes above the poverty level B. higher wages boost worker productivity and efficiency C. higher wages will cause employers to reduce the payroll but the total wages of remaining workers will be higher D higher wages induce more workers into the labor market and thus reduce unemployment E. it is more efficient for the private sector to provide a higher wage than for the government to provide transfer payments to low-income workers
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.