With a Price Floor

question 4

Multiple Choice

With a price floor:

• A) producer surplus will fall if profits fall.
• B) producer surplus will fall if profits rise.
• C) producer surplus will increases if profits fall.
• D) producer surplus always increases.

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Definitions:

Suppliers

Businesses or individuals that provide goods or services to another entity under terms specified in a contract.

Factors of Production

The resources utilized in the production of goods and services, traditionally categorized into land, labor, and capital.

Circular-Flow Model

A model that illustrates the movement of resources and money between firms and households in an economy.

Capital

Wealth in the form of money or other assets owned or employed in business by an individual, firm, or country.