If a price floor is a binding constraint on a market, then
a. the equilibrium price must be above the price floor
b. the quantity demanded must exceed the quantity supplied.
c. sellers cannot sell all they want to sell at the price floor.
d. buyers cannot buy all they want to buy at the price floor.
c
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Which statement best explains why demand for gasoline is inelastic?
a. Gasoline prices are currently very high. a. There is no substitute available c. Gasoline uses a small portion of a person's income. d. People have already cut back their driving to the minimum.
In 1984, British Prime Minister Margaret Thatcher decided to shut down so-called "uneconomic" coal mines owned by the government. The National Union of Mineworkers protested, asserting that there was enough coal in the mines to continue current levels of production for years. Thatcher implicitly argued that her decision was economically sound because, at any practical level of output, for each
"uneconomic" mine, a. MC > AC. b. for every input, MPP > APP. c. MC > MR. d. AC > MC.