Refer to the Figure Below

question 143

Multiple Choice

Refer to the figure below. If the government imposed a price ceiling of $40, what would happen in this market?

• A) There would be excess supply.
• B) There would be excess demand.
• C) The price ceiling would have no effect.
• D) The equilibrium quantity would fall.

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Definitions:

Law of Effect

A principle in psychology which states that actions which produce rewards are likely to be repeated, while actions that produce discomfort are less likely to be repeated.

Serial Position Effect

A phenomenon in memory that suggests people tend to recall the first and last items in a series best, and the middle items worst.

Primacy Effect

The tendency to remember information at the beginning of a list better than information in the middle or end.

Recency Effect

The tendency to better remember information that is encountered last in a series.