If the Price Is Above the Equilibrium Price in the Market

question 167

Multiple Choice

If the price is above the equilibrium price in the market for grapefruit,assuming a positively sloped supply curve and a negatively sloped demand curve,total surplus:

• A)will be greater than if price were at equilibrium.
• B)will be less than if price were at equilibrium.
• C)will be the same as if price were at equilibrium.
• D)may be different than if price were at equilibrium,but we cannot determine this without more information.

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Definitions:

Supply Curves

Graphical representations showing the relationship between the price of a good and the quantity supplied.

Demand Curves

Demand curves graphically represent the relationship between the price of a good and the quantity demanded by consumers.

Minimum Wage

is the lowest legal salary that employers can pay workers, set by government law to protect workers from unduly low pay.

Price Support

Government intervention in a market to maintain the price at a certain level, usually done through the purchase of surplus stock or direct subsidies to producers.