The Price Paid by Buyers in a Market Will Increase

question 638

Multiple Choice

The price paid by buyers in a market will increase if the government
(i) increases a binding price floor in that market.
(ii) increases a binding price ceiling in that market.
(iii) decreases a tax on the good sold in that market.

• A)(ii) only
• B)(iii) only
• C)(i) and (ii) only
• D)(i), (ii), and (iii)

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Definitions:

Fixed Coefficients

A term used in production and economics to describe technologies where inputs are used in strict fixed proportions to produce an output.

Production Possibility Set

A graph or curve depicting all maximum output possibilities for two or more goods, given a set of inputs.

Marginal Rate of Substitution

The rate at which a consumer is willing to give up one good in exchange for another, while keeping the overall satisfaction or utility constant.

Pareto Optimal

The configuration of resource distribution where making one person more prosperous requires making another person less so.