If Producers Incorrectly Set the Price of Their Product Too

question 113

Multiple Choice

If producers incorrectly set the price of their product too high a:

• A) shortage will result and consumers will bid the price down to equilibrium.
• B) surplus will result and excess goods in inventory will signal to producers to lower their prices.
• C) shortage will result and consumers will bid the price up to equilibrium.
• D) surplus will result and excess goods in inventory will signal the producers to restrict output until sales increase.

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Definitions:

Pragmatic Concerns

Practical considerations or limitations that affect how research or a policy can be implemented.

Type II Error

A statistical error that occurs when failing to reject a false null hypothesis; also known as a false negative.

α

The significance level in hypothesis testing, typically representing the probability of committing a Type I error.

Type II Error

The error that occurs when the null hypothesis is not rejected when it is actually false, also known as a "false negative".