6. Suppose a small town in Northern California has only one restaurant. Suppose the annual earthquake insurance premiums for that restaurant increase. Which of the following would we expect in the short-run:
  1. An increase in prices and no change in the number of meals sold.
  2. An increase in prices and a decrease in the number of meals sold.
  3. No change in prices and no change in the number of meals sold.
  4. A decrease in prices and no change in the number of meals sold.
  5. A decrease in prices and an increase in the number of meals sold.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved