1) Increasing prices act as a signal to:
a. suppliers to increase the quantity supplied in those markets
b. politicians that price gouging is occurring.
c. consumers that the good is overvalued.
2) Rising oil prices during the 1970s shifted flower production from California to Kenya. Which of the following answers explains this shift?
a. Markets are linked to one another.
b. No transportation costs exist for flowers.
c. The Kenyan flower industry is run by the California flower growers.
3) The equilibrium price in the market represents the:
a. average cost of producing the good.
b. value of the good in its next highest-valued use.
c. price of the good in its lowest-valued use.