Suppose the Government Decides to Create a Ceiling on the Price

question 70

Multiple Choice

Suppose the government decides to create a ceiling on the price of gasoline, which of the following is not likely to be true under the described circumstances?

• A)The ceiling will have no effect if the ceiling is above the equilibrium market price.
• B)Producer surplus will likely increase if the ceiling is below the equilibrium market price.
• C)Producer surplus will be lower with a binding ceiling (below the initial market equilibrium price).
• D)The ceiling will lead to shortages if the ceiling is below the initial market price.

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Definitions:

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Spearman Correlation

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Sample Statistic

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