If the Government Imposes an Effective ________,Output Decreases and ________

question 229

Multiple Choice

If the government imposes an effective ________,output decreases and ________ increases.

• A) price support; consumer surplus
• B) price floor; consumer surplus
• C) price support; total revenue
• D) price floor; marginal benefit to consumers
• E) price ceiling; efficiency

---

Definitions:

Equilibrium Level

In economics, the point at which market supply equals demand, and there is no tendency for change in price or quantity.

Potential Level

The maximum output an economy can produce without leading to inflation, when resources such as labor and capital are fully utilized.

Classical Economists

Economists from the 18th and 19th centuries who focused on the ideas of free markets, the law of supply and demand, and the role of competition in regulating economic activity.

Investment

The allocation of resources, usually money, with the expectation of generating an income or profit.