If the Free-Market Equilibrium Price for Some Product Is $25,then

question 17

Multiple Choice

If the free-market equilibrium price for some product is $25,then a legal price ceiling set at $15 will bring about

• A)the same general effects as a price ceiling of $25.
• B)the same general effects as an equilibrium price of $15.
• C)no change in the market outcomes.
• D)a surplus of the good.
• E)a shortage of the good.

---

Definitions:

Business Cycle

The fluctuations in economic activity that an economy experiences over a period of time, characterized by periods of boom and recession.

Marginal Propensity

Marginal propensity, in economics, refers to the fraction of an increase in income that is spent on consumption. It represents the change in consumption resulting from a change in income.

Government Spending

This refers to the total expenditure by government agencies on goods, services, and public works.

Demand for Goods

The desire, willingness, and ability of consumers to purchase goods at a given price over a specific time period.