If Quantity Supplied Equals 40 Units and Quantity Demanded Equals

question 67

Multiple Choice

If quantity supplied equals 40 units and quantity demanded equals 50 units under a price control, then it is a:

• A) binding price ceiling.
• B) binding price floor.
• C) nonbinding price ceiling.
• D) nonbinding price floor.

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Definitions:

Long-Run Equilibrium

A state in which all factors of production and economic inputs can be fully adjusted, and all market forces are balanced.

Increase in Demand

A situation where the quantity of a good or service that consumers are willing and able to purchase at a particular price rises.

Marginal Revenue

The additional revenue that a firm gains when it sells one more unit of a product or service.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced.