If a Market Is Initially Operating Competitively and Then the Government

question 12

Multiple Choice

If a market is initially operating competitively and then the government imposes a price floor above the equilibrium price,

• A)there will be more resources will be devoted to the production of this product
• B)quantity demanded will rise
• C)producer surplus will fall in the short run
• D)imposition of the floor is probably a positive-sum game
• E)consumer surplus will fall

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Definitions:

Price of C

The price of "C" refers to the cost or price level of a specific good, service, or commodity denoted as "C."

Marginal Utility

Marginal utility refers to the additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service.

Positive

In the context of economics, it can refer to positive statements that are objective and can be tested by looking at the facts.

Negative

Refers to amounts, values, or directions less than zero, often indicating deficit or loss in financial and scientific contexts.