According to the Economics in Action story “A Crushing Reversal” in the slides of chapter 7, what happened to the market for wine in the US between the mid-1990s and 2002? In the mid-1990s, demand for wine in the US increased, which first resulted in higher wine prices and profits until…
A) some producers exited the market so that lower supply pushed prices up even further.
B) some producers exited the market so that lower supply pushed prices down again.
C) new producers entered the market so that higher supply pushed prices up even further.
D) new producers entered the market so that higher supply pushed prices down again.
Answer: D) new producers entered the market so that higher supply pushed prices down again.
You might also like to view...
Which of the following factors would be most likely to encourage investment and capital formation in a less-developed nation?
a. High and variable rates of inflation. b. Tariffs and quotas that restrict international trade. c. A legal system that provides for secure property rights and evenhanded enforcement of contracts. d. High marginal tax rates.
Which of the following do not contribute to long-term economic growth?
a. substantial increases in the money supply b. increased productivity c. savings and investment d. new production technologies