The Government Has Been Considering Doing Away with Minting Pennies

question 72

Multiple Choice

The government has been considering doing away with minting pennies because they are rarely used for purchases (with most people collecting them or throwing them away) .How would an economist best explain this consumer behavior?

• A) More people are using credit and debit cards,so they are not in the habit of using monetary change.
• B) Prices have increased over time,and it would take far too many pennies to buy anything of value.
• C) Prices have increased over time,and the opportunity cost of carrying around large quantities of pennies has become too large.
• D) Prices have increased over time,and the opportunity cost of carrying around pennies has fallen.
• E) People who use pennies probably aren't spending enough money; removing the penny will force people to spend more.

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Definitions:

Equilibrium

A situation in a market where demand equals supply, and there is no tendency for the quantities supplied and demanded to change.

Market

The institution through which buyers and sellers interact and engage in exchange.

S And D

Stands for Supply and Demand, which are the forces that determine the price of goods and services in a marketplace.

CD-Rom Drives

Hardware devices used for reading data stored on CD-ROMs, typically used for distributing software and storing media in the past.