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
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An economy of 25 million people has twenty percent of them engaged in research and development, where their productivity is 0.0056. The economy is on a balanced growth path, when suddenly a wave of immigration raises the population to 27 million
Assume that the new workers are immediately "on the job," and that the fraction engaged in R&D remains twenty percent. For the one period that begins with this population increase, the growth rate of output per person is ________. [Refer to the instruction above.] A) 4.3% B) 1.8% C) 3% D) 8%