When the Government Restricts the Quantity of a Good to Zero

question 78

Multiple Choice

When the government restricts the quantity of a good to zero

• A) an underground market develops.
• B) there is none of the good available anywhere.
• C) people's demand for the product evaporates.
• D) producers stop all production.

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Definitions:

Perfect Competitor

A market structure where many firms offer products or services that are similar, allowing for free entry and exit, and no single firm can influence the market price.

Imperfect Competitor

An entity in a market that does not hold enough power to dictate the conditions of the market but can influence the price and output of its goods to some extent.

MRP

Marginal Revenue Product, the additional revenue generated from employing one more unit of a factor of production.

Unit of Input

The smallest measure of an input (like labour, materials) used in the production of goods or services.