The prices of certain goods, such as ice and gasoline, often increase after a natural disaster such as a hurricane. The economic explanation for this observation is that
A) people panic in disaster situations.
B) disasters bring out the worst in people.
C) the disaster temporarily reduces the supply of the goods and increases the demand for the goods.
D) the disaster temporarily reduces the supply of the goods and reduces the demand for the goods.
Answer: C
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In a Bertrand model, if one firm has a dominant strategy, its best-response function
A) does not exist. B) is identical to its rival. C) is a constant. D) is to respond to its rival's price increase with a price decrease.
Other things the same, if the price level rises by 2% and people were expecting it to rise by 5%, then some firms have
a. higher than desired prices, which increases their sales. b. higher than desired prices, which depresses their sales. c. lower than desired prices, which increases their sales. d. lower than desired prices, which depresses their sales.