If Firms Are Unable to Lower Prices Because of a Legally

question 287

Multiple Choice

If firms are unable to lower prices because of a legally mandated price floor, then:

• A) firms are better off (higher profits) at the expense of consumers.
• B) firms will often compete by offering higher-quality goods than consumers are willing to pay for.
• C) consumers will decrease their demand due to the high prices.
• D) quantity supplied will be less than quantity demanded.

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Definitions:

Competitive

Having a strong desire to be more successful than others, often characterized by strategies aimed at winning or achieving superiority.

Cooperative

An organization or system operated and owned by a group of individuals for their mutual benefit, focusing on shared goals or interests.

Social

Pertaining to the way in which individuals interact with one another within society, including the structures and conventions that govern these interactions.

Economic

Relating to the production, distribution, and consumption of goods and services, or the wealth and resources of a region or community.