Table 6-1 -Refer to Table 6-1.Suppose the Government Imposes a Price Ceiling

question 89

Multiple Choice

Table 6-1

-Refer to Table 6-1.Suppose the government imposes a price ceiling of $1 on this market.What will be the size of the shortage in this market?

• A) 0 units
• B) 2 units
• C) 8 units
• D) 10 units

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Definitions:

Price Support

A government intervention mechanism to maintain the price of a commodity at a certain level by buying excess supply or offering subsidies.

Price-Support Program

Government interventions to maintain the market price of a commodity or product above its equilibrium level to support the income of producers.

Freedom to Farm Act

A U.S. law enacted in 1996 aimed at allowing farmers the flexibility to plant what they choose, sell to whom they choose, and manage their business as they see fit, significantly reducing federal government involvement in farming decisions.

Misallocation

Misallocation refers to an inefficient allocation of resources, where goods or services are not distributed or allocated according to an optimal pattern, often leading to a loss of economic value.