If a Binding Price Floor Is Imposed on the Video

question 118

Multiple Choice

If a binding price floor is imposed on the video game market, then

• A)the demand for video games will decrease.
• B)the supply of video games will increase.
• C)a surplus of video games will develop.
• D)a shortage of video games will develop.

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Definitions:

Cost

The expenditure incurred in the production of goods or services, including time, labor, materials, and financial resources.

Technological Advance

The development and application of innovative tools, machines, materials, and processes that improve efficiency and productivity.

Allocative Efficiency

A state of resource allocation in which it is impossible to make anyone better off without making someone else worse off, often achieved when the value placed on goods and services by consumers is aligned with the costs of producing them.

Productive Efficiency

A state where an economy or entity can no longer produce more of one good without reducing the production of another good, implying that production occurs at the lowest possible cost.