In the long run if there is a shortage in the market for a product, the guiding (allocation) function of price can be expected to cause
A) an increasing shift in the demand for the product.
B) a decreasing shift in the demand for the product.
C) an increasing shift in the supply of the product.
D) a decreasing shift in the supply of the product.
C
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Mister Jones was selling his house. The asking price was $220,000, and Jones decided he would take no less than $200,000. After some negotiation, Mister Smith purchased the house for $205,000. Jones' producer surplus is
A) $5,000. B) $15,000. C) $20,000. D) not able to be calculated from the information given.
If wages for a certain type of labor were higher in one market than in another, then
A) the differential would exist into the long run. B) labor would move from the high wage market to the low wage market until wages were equal. C) labor would move from the low wage market to the high wage market until wages were equal. D) firms would not be acting as profit maximizers.