If a price floor is set below the current market clearing price, then
A) a surplus must immediately occur.
B) a shortage must immediately occur.
C) there will be incentives for black markets to develop.
D) quantity demanded will remain equal to quantity supplied at the current market clearing price.
Ques. 2Imposing a unit excise tax on the final sale of a good or service can be displayed graphically as
A) a vertical shift upward of the demand curve.
B) a vertical shift upward of the supply curve.
C) a vertical shift downward of the demand curve.
D) a vertical shift downward of the supply curve.
Ques. 3A firm that has a great deal of control over the price of a good is said
A) to function in a black market.
B) to create a tax incidence.
C) to have monopoly power.
D) to be in an antitrust position.
Ques. 4Price controls may be thought of as
A) a restraint on the rationing function of prices.
B) useful tools that promote production.
C) necessary in market economies.
D) the freeing-up of free market forces.
Ques. 5Refer to the above figure. The shape of the production possibility curve indicates that production of
A) wheat is characterized by increasing costs while the production of beans is characterized by decreasing costs.
B) wheat is characterized by decreasing costs while the production of beans is characterized by increasing costs.
C) both goods are characterized by increasing costs.
D) both goods are characterized by decreasing costs.
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