Which of the Following Reflects a Practical Example of the Price

question 111

Multiple Choice

Which of the following reflects a practical example of the price confusion problem?

• A) Lines are short at the coffee shop you own because your resource prices are rising and your retail prices must be raised at the same rate; your customers are confused as to whether they should buy from your shop or not.
• B) Long lines at the coffee shop you own prompt you to open a new coffee shop, but the second shop is unsuccessful because the first shop's success was just due to your prices being set too low (below market prices) because of inflation.
• C) It is difficult for you to determine whether the long lines at your coffee shop are due to increased demand or because inflation has created "too many dollars chasing too few goods."
• D) It is difficult for you to determine the right signal to send to your consumers through prices because the signal sent to you by the Bureau of Labor Statistics is easily misinterpreted.
• E) Signals sent from consumers to producers are clear, but those from producers to consumers are confused.

---

Definitions:

Ethics

Moral principles that govern a person's behavior or the conducting of an activity.

Indirect Cost

A type of expense not directly attributable to a specific cost object, such as a product or project, and often includes administrative expenses, utilities, and security costs.

Supervisor Salary

The compensation, including wages and benefits, given to an individual who oversees and directs the work of others.

Scooter Assembly

The process of putting together the various components of a scooter to make it ready for sale or use.