Suppose Anthony Lives in a Community with No Price Controls

question 55

Multiple Choice

Suppose Anthony lives in a community with no price controls.What would he expect to happen if his town borders a community where there is a binding price floor on most products?

• A) Prices in the legal market in the community with a binding price floor would fall.
• B) There would be smaller surpluses in the community with a binding price floor.
• C) More consumers would purchase the product in the community without a price floor.
• D) The black market in the community with a binding price floor would be larger.
• E) Sales of the product in the community with a binding price floor would increase.

---

Definitions:

Automobile Manufacturer

A company engaged in the designing, production, marketing, and selling of motor vehicles.

Sample

A subset of individuals or observations selected from a larger population, used to infer or make predictions about the population.

Poisson Distribution

A probability distribution that measures the probability of a given number of events happening in a fixed interval of time or space when these events occur with a known constant mean rate and independently of the time since the last event.

P-Value Approach

A method in statistical hypothesis testing that uses the calculated probability to determine the significance of the observed data.