Suppose That the Equilibrium Price in the Market for Widgets

question 126

Multiple Choice

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

• A)would necessarily increase even if the higher price resulted in a surplus of widgets.
• B)would necessarily decrease because the higher price would create a surplus of widgets.
• C)might increase or decrease.
• D)would be unaffected.

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Definitions:

Preoperational

A stage in Piaget's theory of cognitive development where children aged 2 to 7 years old begin to use language and think symbolically, but are not yet able to use logical reasoning.

Preconventional

A stage in Kohlberg's theory of moral development where moral reasoning is based primarily on consequences and personal benefits.

Formal Operational

A stage in Piaget's theory of cognitive development where individuals can think abstractly and reason logically.

Ego-Integrity Vs. Despair

A stage in Erik Erikson's theory of psychosocial development occurring in late adulthood, where the individual reflects on their life and either achieves a sense of fulfillment or experiences despair.