Figure 6-5 -Refer to Figure 6-5. If the Horizontal Line on the Line

question 529

Multiple Choice

Figure 6-5
-Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

• A) binding and creates a surplus of 60 units of the good.
• B) binding and creates a surplus of 20 units of the good.
• C) binding and creates a surplus of 40 units of the good.
• D) not binding, and there will be no surplus or shortage of the good.

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Definitions:

Quantity Demanded

The specific amount of a good or service consumers are willing to buy at a given price, holding all other factors constant.

Price

The expected, necessary, or contributed financial amount in exchange for something.

Total Revenue

The complete amount of income generated by the sale of goods or services related to the company's primary operations.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a given time period.