If the Price of a Good Is Below the Equilibrium

question 175

Multiple Choice

If the price of a good is below the equilibrium price,

• A) suppliers will find inventories building; they will cut output and raise prices.
• B) suppliers will find inventories being depleted. They will increase production and raise prices.
• C) the demand curve will shift down until an equilibrium is established at the existing price.
• D) the supply curve will shift up until an equilibrium is established at the existing price.

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Definitions:

Cost-Justified

A determination that an expense, investment, or action is deemed reasonable or worthwhile based on its cost.

Robinson-Patman Act

is a United States federal law that prohibits anticompetitive practices by producers, specifically price discrimination.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay.

Producer Surplus

The disparity between what sellers are prepared to accept for a product or service and the amount they actually get.