Exhibit 4-11 Data on Supply and Demand Which of the Following

question 177

Multiple Choice

Exhibit 4-11 Data on supply and demand Which of the following would occur if the government imposed a price floor (support price) of $4 per bushel in the wheat market shown in Exhibit 4-11?

• A)Buyers would want to purchase more wheat than is supplied.
• B)Buyers would not purchase all of the wheat grown.
• C)Shortage of wheat would increase the price of wheat.
• D)Farmers would grow less wheat.

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Definitions:

Marginal Utility

The change in total utility a person receives from consuming an additional unit of a good or service.

Utility Function

A mathematical representation that ranks an individual's preferences over a set of goods and services, based on the level of satisfaction or utility derived.

Optimal Utility Rule

A principle in consumer theory stating that consumers allocate their income in a way that maximizes their total utility, given their budget constraint.

Indifference Curve

A graph representing combinations of goods or services among which a consumer is indifferent, showing the same level of utility for each point along the curve.