Suppose the Equilibrium Price of Carrots Is $1

question 250

Multiple Choice

Suppose the equilibrium price of carrots is $1. The price floor instituted by the government is $1.50. Based on this information, which scenario would you expect to take place in the market?

• A) There would be a surplus of carrots.
• B) There would be a shortage of carrots.
• C) Farmers would switch from growing carrots to growing potatoes.
• D) The price floor would have no impact on the market because it is higher than the equilibrium price.

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Definitions:

Synergy Value

The additional value generated by combining two companies or assets, where the value of the whole is greater than the sum of the individual parts.

Incremental Benefit

The additional gain derived from a new action or decision, compared to the previous state, often used in cost-benefit analysis.

Stand-Alone Firm

A business that operates independently, without reliance on or integration with other companies.