Suppose That the Owner of a Local Ice Cream Store

Multiple Choice

Suppose that the owner of a local ice cream store, knowing that demand for ice cream is higher when the weather is warmer, always charges a price in cents for a scoop of ice cream that is equal to two times the current outdoor temperature, measured in Fahrenheit (so that if it is 90 degrees outside, the ice cream is $1.80 per scoop) . This type of behavior is ________.

A) exactly the type of behavior that Keynes believed most firms exhibit
B) known as meeting demand
C) inconsistent with the key assumption upon which the basic Keynesian model is built
D) free from menu costs