You notice that the price of butter rises and then falls. The best explanation for this is that:

A. demand for butter increased causing price to rise, which attracted other firms to enter the market causing supply to increase, which caused the price to go back down.
B. demand for butter decreased causing price to rise, which attracted other firms to enter the market causing supply to increase, which caused the price to go back down.
C. demand for butter increased causing price to rise, which induced other firms to exit the market causing supply to decrease, which caused the price to go back down.
D. demand for butter increased causing price to rise, which attracted other firms to enter the market causing supply to decrease, which caused the price to go back down.


Answer: A

Economics

You might also like to view...

What is the limitation of using exchange rate-based measures as indicators of the standard of living across countries?

What will be an ideal response?

Economics

Barter requires the

A) exchange of goods and services directly for other goods and services. B) use of fiat money as a medium of exchange. C) use of commodity money as a medium of payment. D) the triple non-coincidence of wants. E) use of money as a unit of account.

Economics

When the government deregulates a product or service, what happens to it?

(A) Some government regulations over the industry are eliminated. (B) Government control over the industry is stopped. (C) The product or service is available to more people. (D) The product or service becomes cheaper.

Economics

A ________ occurs if all players in a game play their best strategies given what their competitors do.

A. prisoners' dilemma B. dominant strategy C. Nash equilibrium D. tit-for-tat strategy

Economics