Which of the following is an example of a price floor?
A. Rent controls
B. Maximum prices for gasoline
C. Usury laws that set maximum interest rates
D. The minimum wage
Answer: D
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The greater the number of firms in a colluding oligopoly, the ________ the gain from undercutting the monopoly price and the ________ the potential future loss from a price war.
A. smaller; smaller B. smaller; larger C. larger; larger D. larger; smaller
An economy's total labor income is $2 trillion, and total capital income is $1 trillion. In the Cobb-Douglas production function, the exponent on capital is ________
A) two-thirds B) one-half C) one-third D) 0.3 E) none of the above
The fourth step of the four step process is to
a. identify the new equilibrium and then compare the original equilibrium price and quantity to the new equilibrium price and quantity. b. decide whether the economic change being analyzed affects demand or supply. c. draw a demand and supply model before the economic change took place. d. decide whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram.
Explain why the nation's MPC remains constant as national income increases