Examlex
Suppose that a firm maximizes its profits by producing a quantity of 20 units. The market price is $5. The firm's variable costs are $70 and its fixed costs are $40. What should the firm do in the short run? In the long run?
Law of Demand
The Law of Demand states that, all else being equal, as the price of a good increases, the demand for that good decreases, and conversely, as the price decreases, demand for the good increases.
Price Ceiling
A government-imposed limit on how high a price can be charged for a product, service, or commodity, usually intended to protect consumers from excessive costs.
Economic Effects
The consequences of a particular policy or economic event on the welfare of the economy.
Price Floor
A government-imposed minimum price for a product or service, intended to prevent prices from falling below a certain level.
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