Suppose That a Price Floor Is Established and the Government

question 60

Multiple Choice

Suppose that a price floor is established and the government declares that it will purchase any excess supply.Which of the following statements best characterizes the loss of total economic surplus that results from this change?

• A) Consumers are encouraged to consume too much.
• B) The extra cost of the last unit produced is greater than the extra benefit of the last unit consumed.
• C) Producers are encouraged to produce too little.
• D) Firms will spend too little on political contributions to maintain the price floor.
• E) The enforcement of the price floor is extremely costly.

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Definitions:

Mitral Valve

A valve in the heart located between the left atrium and left ventricle; it prevents the backflow of blood into the atrium.

Aortic Valve

A valve in the heart between the left ventricle and the aorta that prevents blood from flowing back into the heart.

Conducting System

A network of specialized cardiac muscle cells responsible for initiating and distributing the electrical impulses that stimulate heart contraction.

AV Valve

The atrioventricular (AV) valve regulates blood flow from the atria to the ventricles in the heart.