In This Market, Economists Would Call a Government-Set Minimum Price

question 212

Multiple Choice

$$\begin{array} { | c | c | c | } \hline \text { Quantity Demanded } & \text { Price } & \text { Quantity Supplied } \\\hline 52 & \$ 50 & 73 \\\hline 62 & 45 & 62 \\\hline 72 & 40 & 51 \\\hline 82 & 35 & 42 \\\hline 92 & 30 & 33 \\\hline\end{array}$$ In this market, economists would call a government-set minimum price of $50 a

• A) price ceiling.
• B) price ?oor.
• C) equilibrium price.
• D) fair price.

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Definitions:

Degree of Operating Leverage

A ratio that measures how a percentage change in sales will affect profits, highlighting the impact of fixed costs on earnings.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss for the business.

Variable Expenses

Costs that change in proportion to the activity or volume of operations in a business, such as raw materials and labor costs.

Fixed Expenses

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.