The removal of a price ceiling in a market results in:
a. an increase in the market price.
b. a shortage in the market.
c. over-production of the commodity and a surplus.
d. a fall in the market price.
e. abnormal profits for producers.
a
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A movement along a demand curve is
A) a change in demand and can be caused by a change in consumers' income. B) a change in the quantity demanded and is caused by a change in the price of the good. C) a change in the quantity demanded and can be caused by a change in consumers' income. D) a change in demand and is caused by a change in the price of the good.
Generic Drug Industry Dynamics When a brand name drug's patent protection expires, many generic producers are usually ready to enter the market. These firms' products are close substitutes, they have similar production technologies, the regulatory
hurdles to enter are not so great, and, within a few months, there are plenty of rivals. What would you predict for the profitability during these first few months after generic drug entry?
A busy country store is the only producer and distributor of maple sausages in New Hampshire. It calculates that if it sets MR = MC, it will sell 2,000 sausages at a price of $10 and make a total economic profit of $6,000 . Instead, the store decides to charge a price of $8 . We can infer that the store
a. is lowering the price so that it can earn more than $6,000 total profit b. is operating in a contestable market so it is pricing the sausages to keep out competition c. will now sell fewer sausages according to the law of demand d. is now operating at a loss of $1 per sausage e. hopes that its demand is inelastic so that total revenue will increase
The price ceiling causes a
A. shortage of 45 units. B. surplus of 85 units. C. shortage of 85 units. D. surplus of 40 units.