If the Government Set a Price Floor at $8

question 80

Multiple Choice

If the government set a price floor at $8

• A)there would be a temporary surplus,then prices would fall to equilibrium.
• B)there would be a permanent surplus,at least until the price floor was lifted.
• C)the price would rise back to the equilibrium price.
• D)the price floor would not have any effect on this market.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, used to evaluate the trade-offs in economic decision-making.

Marginal Principle

A decision-making practice that involves considering the additional benefits or costs of a change in activity level, choosing to increase the level if the marginal benefits exceed marginal costs.

Resources

Assets, materials, or substances available for use in the production process, human activities, or for satisfying needs.

Economists

Professionals who study how societies use scarce resources to produce valuable commodities and distribute them among different people.