Because Many Resource Prices Are Set by Long-Term Contracts, in the Short

question 200

Multiple Choice

Because many resource prices are set by long-term contracts, in the short run

• A) costs will increase by more than product prices when demand increases.
• B) costs will decrease when the demand for products increases.
• C) costs will increase by less than product prices when demand increases.
• D) costs will decrease by more than product prices when demand decreases.

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Definitions:

Momentary Maximization

The tendency of an organism to choose an option that provides immediate benefits, even if a different choice could yield a higher cumulative benefit over time.

Maximizing Law

A principle suggesting that individuals behave in ways that they believe will maximize their rewards and minimize their losses.

Matching Law

A principle in psychology and behavioral economics that states the proportion of responses directed towards an option matches the proportion of reinforcements obtained from that option.

Prefrontal Cortex

The prefrontal cortex is a part of the brain located at the front of the frontal lobes; it is involved in complex behaviors including planning, decision making, and moderating social behavior.