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.
Correct Answer:
Verified
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