Which of the Following Causes a Surplus of a Good

question 139

Multiple Choice

Which of the following causes a surplus of a good?

• A)a binding price floor
• B)a binding price ceiling
• C)a tax on the good
• D)More than one of the above is correct.

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Definitions:

Variable Cost

Costs that change in proportion to the activity or volume of output in production, such as raw materials and direct labor costs.

Fixed Cost

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance.

Marginal Cost

The amount of money spent to manufacture one additional unit of a product or service.

Adam Smith

Was an 18th-century Scottish economist and philosopher, known as the "father of modern economics" for his influential work on the nature and causes of the wealth of nations.