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

question 48

Multiple Choice

If a price floor is set at $23 in the market shown in the graph:

• A)some consumers would lose because they will pay a higher price.
• B)some producers would gain because they will sell at a higher price.
• C)the quantity traded in the market would fall.
• D)All of these are correct.

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Definitions:

Negative Externality

A cost imposed on third parties not involved in a transaction or activity, such as pollution from a factory affecting nearby residents’ health.

Second-Hand Smoke

The smoke inhaled involuntarily from tobacco being smoked by others, posing health risks to non-smokers.

Unemployment

The situation where individuals who are able and willing to work are not able to find employment.

Long-Term Effects

The impacts or results of a policy, action, or event that manifest or become apparent over a lengthy period.