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Natural Disasters Often Cause Shortages of Critical Supplies

Question 256

Multiple Choice

Natural disasters often cause shortages of critical supplies. What outcomes would neoclassical and behavioral economics typically predict from these events?


A) Both would expect prices to rise significantly, whether from market forces or from self-interest overwhelming any sense of compassion for others.
B) Both would expect sellers to keep prices unchanged, whether to keep customers happy long-term or out of a sense of fairness.
C) Neoclassical economists would expect economic chaos and collapse, while behavioral economists would expect everyone to act cooperatively.
D) Neoclassical economists would expect prices to rise dramatically as a natural result of the greater scarcity, and behavioral economists would expect prices to increase less or not at all as people try not to take advantage of the situation.

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