Refer to the Graph Shown

question 91

Multiple Choice

Refer to the graph shown. If regulators wanted this monopolist to earn only a normal profit, they would set price equal to:

• A) $2.
• B) $3.
• C) $8.
• D) $12.00.

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Definitions:

Surplus

The situation in which the quantity supplied of a good exceeds the quantity demanded, often leading to a drop in prices.

Equilibrium Price

Equilibrium price is the market price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Government Implementation

The process by which government agencies put laws, regulations, or policies into practice.

Price Floor

A minimum legal price set above the equilibrium price, leading to surpluses as supply exceeds demand.