Assume That the Price for a Pair of Shoes Has

question 72

Multiple Choice

Assume that the price for a pair of shoes has been set at $20. The demand for a pair of shoes is given by and the supply for the same pair of shoes is . In both cases p is price per pair and q is the quantity produced or sold. Compare the quantity demanded and the quantity supplied. Will there be a surplus or shortfall at this price? ​

• A) There will be a shortfall.
• B) There will be a surplus.

---

Definitions:

Rent-Seeking Activities

Practices of gaining economic benefits without contributing to productivity, typically through manipulation of the political environment.

Monopoly Power

The exclusive control by one company over an entire industry or market, allowing it to dictate terms and prices without competition.

Welfare Loss

This refers to the decrease in economic efficiency that occurs when the equilibrium for a good or service is not achieved or is distorted by external intervention, leading to a loss of social surplus.

Consumer Surplus

The discrepancy between the amount consumers are ready to pay for a good or service and the price they end up paying.