Assume a Price Floor Is Imposed in the Wheat Market

question 117

Multiple Choice

Assume a price floor is imposed in the wheat market at the equilibrium price, and that a price ceiling is imposed in the gasoline market at the equilibrium price. What will an increase in supply in both the wheat and gasoline markets create?

• A) A surplus in the wheat market and an increase the quantity of gasoline traded.
• B) A surplus in the wheat market and a shortage in the gasoline market.
• C) Shortages in both the wheat and gasoline markets.
• D) Surpluses in both the wheat and gasoline markets.

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Definitions:

Assigned

Allocated or designated to a particular task, position, or purpose.

Unassigned

Refers to funds, resources, or tasks not specifically allocated or designated for a particular purpose or to a particular entity.

Spendable

Refers to the amount of money that is available for use, not tied up in investments or savings.

Nonspendable

Refers to a fund balance category in governmental accounting, indicating funds that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact.