Refer to Price Ceiling. Area B + D represents
The following questions refer to the accompanying diagram which shows the effects of a price ceiling. The initial price and quantity are P0 and Q0, respectively, and the price ceiling is imposed at the price P1. Assume that none of the potential deadweight loss can be avoided.
a. the deadweight loss due to the price ceiling.
b. the fall in consumers' surplus caused by the imposition of the price ceiling.
c. the value of the time and resources spent by consumers to acquire the limited supply.
d. the post-ceiling profits earned by the producers of the good.
c. the value of the time and resources spent by consumers to acquire the limited supply.
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Quantity supplied refers to the amount of a good or service that a firm is willing and able to supply at a given price
Indicate whether the statement is true or false
The main determinant of elasticity of supply is the:
A. number of close substitutes for the product available to consumers. B. amount of time the producer has to adjust inputs in response to a price change. C. urgency of consumer wants for the product. D. number of uses for the product.
A bumper crop would be bad news for farmers if their crop has an inelastic demand because their total revenue would:
A. rise along with price. B. rise as price falls. C. fall as price rises. D. fall along with price.
Which of the following changes aggregate supply and shifts the aggregate supply curve?
i. change in the price level ii. change in potential GDP iii. change in the money wage rate A) i only B) ii only C) iii only D) ii and iii E) i, ii, and iii