Which of These Is NOT Correct? Price Floors and Price

question 118

Multiple Choice

Which of these is NOT correct? Price floors and price ceilings

• A) are typically instituted by government.
• B) can interfere with the process leading to market equilibrium.
• C) can result in surpluses or shortages.
• D) help a market balance the interests of sellers and buyers.

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Definitions:

Technical Substitution

The process of replacing one set of input variables or resources with another set, in production processes, to achieve a similar level of output. This reflects the firm’s ability to adapt to changes in resource availability or cost.

Isoquant

A curve on a graph representing combinations of inputs that yield the same level of output.

MRTS

The Marginal Rate of Technical Substitution, the rate at which one input can be replaced by another while keeping output constant.

Isoquant Map

An isoquant map is a graphical representation used in economics to show combinations of inputs, like labor and capital, that produce the same level of output, illustrating how inputs can be substituted for one another.