What Occurs Whenever a Price Floor Is Imposed Above Equilibrium

question 149

Multiple Choice

What occurs whenever a price floor is imposed above equilibrium price?

• A) The supply will increase due to a higher price until it just equals the quantity demanded.
• B) The demand will increase due to a higher price and a shortage will result.
• C) The quantity supplied will exceed the quantity demanded.
• D) The supply will increase due to a higher price and a surplus will result.

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Definitions:

Oil Refinement

The process of transforming crude oil into useful products like gasoline, diesel, and jet fuel through various physical and chemical treatments.

Pollution Fee

A financial charge applied to entities that emit pollutants, intended to discourage environmental pollution by making it economically costly.

Marginal External Cost

The cost imposed on a third party by the production of an additional unit of a good or service.

Production Efficiency

A level of output where a company cannot produce more of one good without reducing the output of another good, utilizing resources optimally.