If a Price Floor of $23 Were Placed in the Market

question 72

Multiple Choice

If a price floor of $23 were placed in the market in the graph shown:

• A) a surplus of 27 would occur.
• B) a surplus of 37 would occur.
• C) a surplus of 10 would occur.
• D) a surplus of 20 would occur.

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Definitions:

Self-interest

A principle in economics that suggests individuals usually act in a way that is most beneficial to themselves, based on their preferences and objectives.

Efficient Level Output

The level of production where average total costs are minimized and marginal costs equal marginal revenues.

Zero Profit

A situation in which a firm's total revenues match its total costs, resulting in neither profit nor loss.

Inefficiency

Refers to a lack of efficiency, where resources are not used in the most productive way, often resulting in wasted time or energy.