If a Price Floor Is Set at $23 in the Market

question 114

Multiple Choice

If a price floor is set at $23 in the market shown in the graph, which area(s) would represent the surplus that is transferred from consumers to producers?

• A) B + C + D
• B) B + C
• C) C
• D) B

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Definitions:

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the true value of goods and services produced.

Supply Curves

A graphical representation that shows the relationship between the price of a good or service and the quantity that suppliers are willing to offer for sale at that price, over a given period.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating nature of the marketplace where individuals pursuing their own self-interest lead to the benefit of society at large.

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than its competitors.