If the Current Price Is Less Than the Market Clearing

question 192

Multiple Choice

If the current price is less than the market clearing or equilibrium price, we would expect:

• A) a surplus.
• B) downward pressure on price.
• C) upward pressure on price.
• D) no change in the market price.

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Definitions:

Tariff

A tax imposed by a government on goods and services imported from other countries to regulate trade and protect domestic industries.

Sugar

A sweet-tasting, soluble carbohydrate found in many plants, widely used as a sweetener in food and beverages.

Import Quota

A restriction by a country on the quantity of a good that can be imported over a given period.

Consumer Surplus

The difference in the amount consumers are prepared to pay versus what they actually pay for goods or services.