Figure: Price Ceiling in a Generic Market Refer to the Figure

question 276

Multiple Choice

Figure: Price Ceiling in a Generic Market Refer to the figure. If the government imposes a price ceiling at the price of $4.00, the result would be a:

• A) surplus of 40 units.
• B) shortage of 40 units
• C) surplus of 20 units.
• D) shortage of 20 units.

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Definitions:

Marginal Product

The increase in output resulting from a one-unit increase in the quantity of a particular input, holding other inputs constant.

Isoquants

Isoquants are curves that represent combinations of various inputs that produce the same level of output, used in production theory to analyze input choices.

Input Prices

The cost of resources used in the production of goods and services.

MRTS

Marginal Rate of Technical Substitution, the rate at which one factor must decrease as another increases to keep output constant.