Consider a Market for Fish Whose Market Demand and Market

question 117

Multiple Choice

Consider a market for fish whose market demand and market supply for fish are specified as Qd = 300 − 2.5P and Qs = − 20 + 1.5P, respectively. The government decides to impose a price floor of $50 per ton. What would be the resulting market distortion?

• A) Shortage of 120 tons of fish
• B) Shortage of 175 tons of fish
• C) Surplus of 120 tons of fish
• D) There would be no market distortion

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Definitions:

Operating Revenues

The income earned from a company's main business operations, excluding income from investments or secondary sources.

Operating Expenses

The costs associated with the normal operations of a business, excluding costs related to producing goods or services, like rent, utilities, and salaries.

Interest Expense

The cost incurred by a company for borrowed funds, shown as an expense on the income statement.

Dividend Payments

The distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.