Explain why a price floor set below the equilibrium price is ineffective
What will be an ideal response?
Price floors are legal minimums; it is legal to charge the floor price, or higher. If the equilibrium price is legal, that is, the equilibrium price is above the price floor so that the price floor is below the equilibrium price, then the price floor has no effect on the market because the market price does not change.
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The tit-for-tat strategy is:
A. one in which both players explicitly agree to compete in the first round of a repeated game, and if one of them cooperates, the other will defect. B. not effective in prisoner's dilemma type games. C. one in which a player in a repeated game takes the same action that his or her opponent did in the preceding round. D. All of these statements are true.
A CPI that equals 1.34 in 2016 (when 2010 is the base year) means that:
A. prices in 2016 are 34 percent higher than in 2015. B. the average level of prices is 34 percent higher in 2016 than in the base year. C. the CPI equals $1.34 in 2016. D. the inflation rate in 2016 is 134 percent.
Which of the following statements about trade and domestic pollution is accurate?
A. If polluters are not forced to internalize the external costs associated with their production, free trade could result in the country exporting the wrong products. B. In the presence of free trade, the costs of pollution can be transferred almost completely by the exporting country to the importing country. C. It is possible for free trade to hurt a country if polluters are forced to internalize the external costs associated with their production. D. Free trade is likely to cause producers to reduce their levels of pollution due to international competition.
Which of the following is one of the main reasons behind the high debt to GDP ratio in Greece?
A. Labor migration B. Tax evasions C. Population explosion D. Capital flight