Use the Following Figure to Answer the Questions That Follow

question 142

Multiple Choice

Use the following figure to answer the questions that follow.

-If the government imposes a price floor on wheat at $5,what would be the amount of disequilibrium?

• A) There will be a surplus of 3 million
• B) There will be a shortage of 3 million.
• C) There will be neither a shortage nor a surplus.
• D) There will be a surplus of 2 million.
• E) There will be a shortage of 2 million.

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, which may change with the level of output.

Fixed Cost

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance.

Total Cost

The total of all costs associated with producing goods or services, encompassing both constant and fluctuating expenses.

Variable Cost

Variable cost is a cost that varies directly with the level of production or sales volume, such as materials and labor costs.