-In the Graph Shown Above,if the Government Set a Price

question 54

Multiple Choice

-In the graph shown above,if the government set a price ceiling of $26,

• A)there would be a permanent shortage,at least until the price ceiling was lifted.
• B)there would be a temporary shortage,then the price would fall to equilibrium price.
• C)price would rise to the equilibrium price.
• D)price would immediately fall to the equilibrium price.

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Definitions:

World Price

The international market price of a good or service, influenced by global supply and demand.

Free Trade

An economic policy that allows goods and services to be bought and sold across international borders with little to no government tariffs, quotas, subsidies, or prohibitions to inhibit exchange.

Consumer Surplus

The contrast between the potential payment by consumers for a product or service and their real expenditure.

Autarky

An economic system or policy of self-sufficiency where a country does not engage in international trade.