When a Binding Price Floor Is Imposed on a Market

question 81

Multiple Choice

When a binding price floor is imposed on a market, _____.

• A)price serves more effectively as a rationing device
• B)the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor
• C)every producer and every consumer gain from it
• D)the quantity demanded at the price floor exceeds the quantity supplied
• E)the unemployment level in the economy increases

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Definitions:

Apples

Edible fruits from the Malus domestica tree, characterized by their sweet taste and variety of colors, and consumed worldwide.

Bananas

A type of elongated, edible fruit produced by various kinds of large herbaceous flowering plants in the genus Musa.

Perfect Substitute

Goods that a consumer perceives as identical in utility, meaning the consumer is willing to substitute them for one another at a constant rate.

Utility Function

A mathematical representation that expresses how a consumer's total satisfaction or happiness is influenced by their consumption of different goods and services.