Which Would NOT Happen as the Result of a Price

question 86

Multiple Choice

Which would NOT happen as the result of a price floor?

• A) a surplus of the good
• B) lost gains from trade
• C) misallocation of resources
• D) decreases in product quality

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Definitions:

LRAC Curve

The Long-Run Average Cost curve, showing the lowest possible cost of producing different levels of output when all inputs are variable.

Increasing-Cost Industry

An industry where production costs increase as output grows, often due to resource limitations or regulatory constraints.

Decreasing-Cost Industry

An industry in which average costs of production decrease as the industry grows larger, often due to economies of scale.

Long-Run Equilibrium

A state in which all factors of production and markets in an economy are in balance, and all firms in the market are earning normal profits with no inclination to enter or exit the market.