Refer to the Graph Shown

question 198

Multiple Choice

Refer to the graph shown. Which statement best characterizes the difference between the effect of a price ceiling in the short run and the long run?

• A)A price ceiling of P₀ will create a shortage of (Q₄ − Q₀)in the short run and the long run.
• B)A price ceiling of P₂ will create a shortage of (Q₃ − Q₀)in the short run and a smaller shortage of (Q₃ − Q₁)in the long run.
• C)A price ceiling of P₂ will create a shortage of (Q₃ − Q₁)in the short run, but a greater shortage of (Q₃ − Q₀)in the long run.
• D)A price ceiling of P₀ will create a shortage of (Q₃ − Q₀)in the short run and the long run.

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Definitions:

Groupthink

A phenomenon where a group's desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Mental Efficiency

The effectiveness with which an individual can perform cognitive tasks, including problem-solving, memory, and reasoning.

Conformity Pressures

The pressure applied by a group that motivates individuals to modify their attitudes, values, or actions to conform with the norms of the group.

Polarization Theory

A theory suggesting that groups tend to make decisions that are more extreme than the initial inclination of its members.