In Which of These Instances Does Price Function as a Signal

question 95

Multiple Choice

In which of these instances does price function as a signal in the market?

• A) Suppliers invest more in exploration when the price of oil increases.
• B) Consumers complain of price gouging as the price of oil skyrockets.
• C) Government imposes price controls on the skyrocketing price of oil.
• D) All of the answers are correct.

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Definitions:

Retailers

Businesses that sell goods and services directly to consumers.

Freight Costs

Expenses associated with transporting goods from one place to another, which can include costs for shipping, trucking, or rail transport services.

Operating Expense

Expenses incurred during the normal operations of a business, such as salaries, rent, and utilities, excluding cost of goods sold.

Outgoing Merchandise

Outgoing merchandise refers to inventory that has been sold and is in the process of being shipped to the customer.