If a Price Floor Is Set Below the Current Market

question 218

Multiple Choice

If a price floor is set below the current market clearing price, then

• A) a surplus must immediately occur.
• B) a shortage must immediately occur.
• C) there will be incentives for black markets to develop.
• D) quantity demanded will remain equal to quantity supplied at the current market clearing price.

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Definitions:

Action Potential

A temporary reversal of the electrical polarity of the membrane of a nerve cell or muscle cell, leading to the transmission of signals along the nerve or muscle fiber.

All-or-none Law

The principle that the strength of a response of a nerve or muscle fiber is not dependent on the strength of the stimulus; if a stimulus is above a certain threshold, a nerve or muscle fiber will fire.

Action Potential

A brief electrical charge that travels down an axon, generating a nerve impulse as a response to a stimulus.

Stimulus

Any occurrence or circumstance that prompts a reaction from a living being.