A shortage is eliminated when
a. a binding price ceiling is removed
b. a binding price ceiling is enacted.
c. a nonbinding price ceiling is repealed.
d. a nonbinding price ceiling is imposed.
a
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Why is the economy at full employment in the long run?
A) Only wages have the ability to adjust. B) Only price can adjust. C) Prices don't adjust. D) Wages and the price level eventually adjust to full employment equilibrium levels. E) Government policies eventually converge on the full employment strategy.
Explain what is meant by predatory pricing, and the inherent difficulties involved with predatory pricing from a firm's point of view.
What will be an ideal response?
A newspaper headline asserts: "Falling Demand Pushes Down Housing Prices." This headline
A) incorrectly implies that the demand for housing can change, whereas in fact only the quantity of housing demanded can change. B) incorrectly implies that the price of housing will rise when demand increases. C) incorrectly implies that more housing will be demanded at higher prices. D) correctly implies that a decrease in demand will decrease the market clearing price.
If the (steadily decreasing) marginal benefit of another day spent in the hospital exceeds the (steadily increasing) marginal cost of an additional day spent in the hospital, the rational consumer of hospital services would be predicted to
A. demand a refund from the hospital for the previous day's stay. B. check out of the hospital immediately. C. complain about the hospital food. D. stay in the hospital for at least that additional day.