If the Government Restricts the Selling of Corn So That

question 23

Multiple Choice

If the government restricts the selling of corn so that the quantity is less than the equilibrium quantity, then the policy I. creates a deadweight loss.
II) decreases total surplus.

• A) Only I is correct.
• B) Only II is correct.
• C) Both I and II are correct.
• D) Neither I nor II is correct.

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Definitions:

Equilibrium Price

The market price at which the quantity of a good supplied equals the quantity demanded, leading to a stable market situation.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and more.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in no shortage or surplus.

Equilibrium Quantity

The quantity of goods or services sold and bought at the equilibrium price, where market supply equals market demand.