-Refer to the Above Figure

question 59

Multiple Choice

-Refer to the above figure. If government sets the maximum legal price of gasoline at $2 per gallon, then the $2 limit acts as

• A) a price floor.
• B) a price ceiling.
• C) an equilibrium price.
• D) a just price.

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Definitions:

Returns To Scale

The rate at which output changes if the scale of all inputs is changed by the same proportion in the production process.

Input

Resources used in the production process to generate goods or services, including labor, raw materials, and capital.

Output

The total amount of goods or services produced by a company, sector, or economy within a specific time period.

Isoquants

Curves that represent all the combinations of two inputs that produce the same level of output, used in the analysis of production technology.