You have responsibility for economic policy in the country of Freedonia.Recently,the neighboring country of Sylvania has cut off all exports of oranges to Freedonia.George,who is one of your advisors,says that the best way to avoid a shortage of oranges is to take no action at all.Charles,another one of your advisors,argues that without a binding price floor,a shortage will certainly develop.Otto,a third advisor,suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges.Which of your three advisors is most likely to have studied economics?

Question

Quizplus · Accepted Answer

George is most likely to have studied economics because taking no action allows the market to adjust naturally. A shortage occurs when prices are kept artificially low (price ceiling) or when supply is restricted. Allowing prices to rise will balance supply and demand.

You Have Responsibility for Economic Policy in the Country of Freedonia.Recently,the