Demand Shocks

question 55

Multiple Choice

Demand shocks:

• A) refer to unexpected changes in the desires of households and businesses to buy goods and services.
• B) refer to unexpected changes in the ability of firms to produce and sell goods and services.
• C) always have a negative impact on the economy.
• D) cause fewer short-run fluctuations than supply shocks.

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Definitions:

Loss

An economic condition where expenses exceed revenues, resulting in negative profit.

Price Discrimination

Price discrimination is the strategy of selling the same product at different prices to different groups of consumers, often based on their willingness to pay, location, or purchase volume.

Disguised Subsidy

Financial support given to industries or businesses in indirect ways, not easily identifiable as traditional subsidies, to lower their costs or increase their competitiveness.

Consumer Surplus

The gap between the total sum consumers are prepared and financially able to spend on a good or service and the sum they actually spend.