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:

Moral Hazard

Moral hazard occurs when one party in a transaction takes on more risk because they know that someone else will bear the cost of those risks.

Transaction

The act of conducting business between two or more parties, often involving the exchange of goods, services, money, or information.

Moral Hazard

A situation in which one party is more likely to take risks because they know that another party bears the consequences or costs of those risks.

Insured Individuals

People covered by insurance policies, protecting them against financial losses from specified risks.