Suppose That the Equilibrium Price in the Market for Widgets

question 126

Multiple Choice

Suppose that the equilibrium price in the market for widgets is $5. If a law increased the minimum legal price for widgets to $6, producer surplus

• A)would necessarily increase even if the higher price resulted in a surplus of widgets.
• B)would necessarily decrease because the higher price would create a surplus of widgets.
• C)might increase or decrease.
• D)would be unaffected.

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Definitions:

Synapse

A synapse is the junction between two neurons or between a neuron and a muscle, where electrical or chemical signals are transmitted.

Neural Transmission

The process by which nerve cells (neurons) communicate with each other through electrical and chemical signals.

Action Potential

A brief electrical charge that travels down a neuron, triggered when the neuron fires and essential for nerve impulse transmission.

Excitation Reaction

A physiological response that increases the activity or efficiency of a part of the body or brain.