If the market price of green tea is $20.00 per pound and the government will not allow green tea growers to charge more than $25.00 per pound of green tea, which of the following will happen?
A. There will be a shortage of green tea.
B. Supply must eventually increase so that the market will come into equilibrium at a price of $17.50.
C. Demand must eventually decrease so that the market will come into equilibrium at a price of $17.50.
D. The price ceiling will be ineffective and the market will remain in equilibrium.
Answer: D
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
To determine who bears the greater share of a tax, we compare the
A) number of buyers to the number of sellers. B) elasticity of supply to the elasticity of demand. C) size of the tax to the price of the good. D) government tax revenue to the revenue collected by the suppliers. E) pre-tax quantity to the post-tax quantity.
A government-inhibited good is often
A) produced by the government. B) subsidized. C) taxed. D) advertised.
A TV actor used to be a teacher. Aside from the salary, he likes both jobs equally well. If he can earn $50,000 as a teacher and $300,000 as an actor, what are his economic rent and opportunity costs as an actor?
a. Economic rent is $250,000 . opportunity costs are $50,000. b. Economic rent is $50,000 . opportunity costs are $250,000. c. Economic rent is $50,000 . opportunity costs are $300,000. d. Economic rent is $300,000 . opportunity costs are $50,000. e. Economic rent is $300,000 . opportunity costs are $350,000.