Every Spring, Motorists Do More Driving Than During the Winter

question 108

Multiple Choice

Every spring, motorists do more driving than during the winter months. Every spring, the price of petrol increases and the motorists buy more petrol. This experience suggests that the

• A) laws of supply and demand are both contradicted for petrol, though only during the spring driving season.
• B) "law of demand" does not always hold for necessities like petrol.
• C) "law of supply" does not always hold for necessities like petrol.
• D) None of the above answers is correct.

Explain the significance of property rights in promoting economic transactions and innovation.

Identify the economic roles of profits and losses in resource reallocation and market responses.

Understand the benefits and limitations of barter and the importance of money in facilitating trade and specialization.

Comprehend the impact of market failures on the economy and the potential role of government intervention.

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Definitions:

Gross Profit

The earnings a company retains after subtracting the expenses related to the production and sale of its goods or the delivery of its services.

Inventory Cost

Inventory cost refers to the total cost associated with acquiring, storing, and managing a company's inventory, including purchase costs, carrying costs, and any spoilage or shrinkage.

Physical Inventory

An actual count of all merchandise or stock on hand at a specific time.

Retained Earnings

Accumulated net income after dividends that is reinvested into the company rather than distributed to shareholders.