The More Flexible Prices Are, the

question 153

Multiple Choice

The more flexible prices are, the

• A) greater demand shifts have to be to bring about a new equilibrium.
• B) larger the shifts in supply will be after a change in demand.
• C) greater the reliance by sellers to change the nominal price.
• D) more quickly a shock to the economy can be absorbed.

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, reflecting the economic benefit to consumers.

Tax

An obligatory financial obligation or other form of levy placed on a taxpayer by a government agency to fund government operations and diverse public spending.

Price Paid

Price paid refers to the actual amount of money exchanged for the acquisition of a good or service.

Tax

Tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.