Over a Period of Time, the Equilibrium Price of a Good

question 177

Multiple Choice

Over a period of time, the equilibrium price of a good increases and the quantity decreases. All of the following could account for this situation, except:

• A) An increase in the costs of production
• B) The removal of a subsidy on the good or service
• C) The imposition of a sales tax on the good or service
• D) A decrease in the price of an alternative good or service that producers could also produce

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Definitions:

Operation of Law

Changes in legal status or rights that occur automatically due to existing legal rules, rather than through the action of any party.

Mutual Agreement

A concord reached by all parties involved, based on shared terms and conditions, often formalized through a contract.

Secured Lending

The practice of issuing loans backed by collateral, providing the lender with security in case of borrower default.

Collateral

An asset offered by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to repay according to the terms of the loan.