Which of the Following Situations Is an Example of General

question 26

Multiple Choice

Which of the following situations is an example of general equilibrium analysis?

• A) An excise tax on cigarettes reduces the supply of cigarettes, leading to higher cigarette prices.
• B) A severe frost destroys a significant portion of the coffee crop, leading to higher coffee prices. The higher coffee prices increase the demand for tea, resulting in higher tea prices. The higher tea prices in turn cause the demand for coffee to rise even more, further increasing the price of coffee.
• C) A decrease in the demand for peanuts causes both the equilibrium price and quantity of peanuts to decrease. As a result, peanut farmers reduce their peanut output and supply decreases.
• D) As fuel costs rise, airlines' costs of production rise. Higher production costs drive profits down, leading to higher air fares and fewer flights.

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Definitions:

Unauthorized Entry

The act of entering a property or system without permission or legal right, often considered a breach or trespass.

Predatory Behavior

Business behavior undertaken with the intention of unlawfully driving competitors out of the market.

Business Behavior

The actions and decisions by a business in relation to its market environment, including ethics, strategy, and interaction with stakeholders.

Socioeconomic

Relating to or concerned with the interaction between social and economic factors.