Suppose that the equilibrium price in the market for widgets is $5 . If a law increased the minimum legal price for widgets to $6, producer surplus
a. would necessarily increase even if the higher price resulted in a surplus of widgets.
b. would necessarily decrease because the higher price would create a surplus of widgets.
c. might increase or decrease.
d. would be unaffected.
c
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The President proposes a reduction of personal income marginal tax rates in the United States. When marginal tax rates are reduced, there is
A) a decrease in the magnitude of the expenditure multiplier. B) an increase in the magnitude of the expenditure multiplier. C) a decrease in the marginal propensity to consume. D) no change in the slope of the AE line. E) an increase in the marginal propensity to consume.
Which of the following is true?
i. A price ceiling set below the equilibrium price decreases search activity. ii. A minimum wage is an example of a price ceiling. iii. A price support decreases the quantity consumed. A) only i B) only ii C) only iii D) i and iii E) ii and iii
The theory of PPP suggests that if one country's price level falls relative to another's, its currency should
A) depreciate. B) appreciate. C) float. D) do none of the above.
Barter is the:
A. direct exchange of goods and services. B. exchange of goods, but not services. C. system that does not depend on a coincidence of wants. D. system used in advanced economies.