What Do Economists Mean When They Speak of Price as a Rationing

question 109

Multiple Choice

What do economists mean when they speak of price as a rationing mechanism?

• A)That all goods produced will be sold.
• B)Consumers get the products they want at prices they can afford.
• C)That shortages of goods in the market price will disappear as a result of price rising which results in the quantity demanded increasing and the quantity supplied decreasing.
• D)That shortages of goods in the market price will disappear as a result of price rising which results in the quantity demanded decreasing and the quantity supplied increasing.

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Definitions:

Net Income

The income that remains in a business after all costs and expenses have been subtracted from total revenue, indicative of the financial performance.

Cash Flow Hedge

A financial instrument intended to offset potential losses or gains that could be incurred by future cash flows, acting as a buffer against currency, interest rate, or commodity price changes.

Forward Exchange Contract

A financial derivative that locks in the exchange rate at which a currency can be bought or sold on a future date.

Fair Value Hedge

A hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized firm commitment, or an identified portion of such an asset, liability, or firm commitment, that is attributable to a particular risk and could affect profit or loss.