If Frost in Florida Reduces the Quantity of Vegetables Sold

question 17

Multiple Choice

If frost in Florida reduces the quantity of vegetables sold by 20 percent and increases their retail price by 30 percent, one can conclude that:

• A) the demand has shifted to the right along a perfectly inelastic supply curve.
• B) the demand has shifted to the right along a perfectly elastic supply curve.
• C) the supply of vegetables has shifted to the left along an elastic demand curve.
• D) the supply of vegetables has shifted to the left along an inelastic demand curve.

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Definitions:

Zero Profits

a situation where a firm's total revenues are exactly equal to its total costs, typically occurring in perfectly competitive markets in the long run.

Noncooperative Equilibrium

A situation in which individuals or firms choose their strategy based on the anticipation that others will act in their own self-interest, leading to an outcome where no participant can benefit by changing their strategy unilaterally.

Prisoners' Dilemma

A concept in game theory where two individuals acting in their own self-interest do not produce the optimal outcome, demonstrating the conflict between individual and collective rationality.

Strategic Behavior

Actions taken by a firm that attempt to influence the future behavior of other firms.