After a price floor of $23 is placed on the market in the graph shown:
A. the quantity traded in the market falls.
B. some consumers lose because they pay a higher price.
C. some producers gain because they sell at a higher price.
D. All of these are true.
Answer: D
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
People debate whether or not the U.S. should allow for greater oil exploration in Northern Alaska. According to the economic way of thinking, the debate is rooted in
A) different perceptions about the additional benefits and the additional costs of oil exploration in Northern Alaska. B) a complete lack of appreciation of the value of wildlife and the ecology of Northern Alaska. C) a complete lack of appreciation of the value of oil in world affairs. D) politics rather than economics.
Suppose an entrepreneur commits to a production schedule but overestimates the market price for her products. Which situation is not possible?
a. Price equals average total cost. b. Losses are greater than if she shut down. c. Total profit is positive. d. Average variable cost is greater than marginal cost. e. Total profit is zero.
The Federal Reserve Bank is the U.S. central bank:
A. who holds, in reserve, all financial assets of banks. B. who holds, in reserve, all financial liabilities of banks. C. whose assets serve as cash in the United States. D. whose liabilities serve as cash in the United States.