The Government Imposes a Price Ceiling on Sugar That Is

question 23

Multiple Choice

The government imposes a price ceiling on sugar that is above the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

• A) using rationing coupons that cannot be resold.
• B) using rationing on a first-come, first-served basis.
• C) using rationing coupons that can be resold.
• D) that no rationing system will be necessary.

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Definitions:

Predict

To declare or indicate in advance; especially, using data and analysis to forecast the occurrence of an event or trends.

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A type of recreational boat or ship, often luxurious and used for personal pleasure or sports.

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An observation that lies an abnormal distance from other values in a random sample from a population.

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A mathematical model that assumes a linear relationship between input variables and the single output variable, where the output can be calculated from a linear combination of the inputs.