Figure 6-10 -Refer to Figure 6-10.A Price Floor Set at

question 174

Multiple Choice

Figure 6-10
-Refer to Figure 6-10.A price floor set at

• A)$6 will be binding and will result in a surplus of 10 units.
• B)$6 will be binding and will result in a surplus of 6 units.
• C)$16 will be binding and will result in a surplus of 10 units.
• D)$16 will be binding and will result in a surplus of 4 units.

Describe the effects of market demand changes on the price and output of a perfectly competitive industry in the short and long run.

Identify and explain the role of the industry supply curve in the context of perfect competition.

Analyze the conditions for long-run equilibrium in a perfectly competitive market, including the zero economic profit condition.

Explain the role of entry and exit of firms in achieving long-run equilibrium in a perfectly competitive market.

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Definitions:

Implied Warranties

Guarantees legally assumed in a transaction, suggesting that the product sold will meet certain standards of quality and reliability.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," indicating that the buyer assumes the risk regarding the quality and condition of the item purchased.

Sales Contract

A legal agreement between a buyer and a seller specifying the terms and conditions of the sale of goods or services.

Strict Product Liability

A legal doctrine that makes manufacturers, distributors, or sellers liable for any defects in the products they market, regardless of fault or negligence.