Under a binding price ceiling, what does the change in consumer surplus represent?
A) The gain in surplus for those buyers who can still purchase the product at the lower price.
B) The loss in surplus for those buyers who previously purchased some units of the good at the higher price, but these units are no longer produced at the lower price.
C) The loss in surplus for those buyers who would like the purchase the excess demand created by the price ceiling policy.
D) Both A and B are correct.
E) Both A and C are correct.
D
You might also like to view...
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Pick the best answer using the economic way of thinking. If information is a scarce good, then ignorance might be
A) a sin. B) stupid. C) bliss. D) rational. E) inefficient.
Doomsday projections have generally
a. been correct. b. been incorrect, but with better technology and the ability to predict the future, these forecasts have become much more accurate in the last few decades. c. been inconsistent. Some projections came true, others failed. d. been wrong.
Refer to the information provided in Figure 9.2 below to answer the question(s) that follow.
Figure 9.2Refer to Figure 9.2. If demand for wheat is D1, then a profit-maximizing firm will produce ________ units and earn ________.
A. 12; positive profits B. 10; negative profits C. 5; zero profits D. 0; negative profits