Refer to the above figure. If a price ceiling of $3 was set
A) the quantity sold would be 80 units.
B) there would be a surplus of 40 units.
C) there would be a shortage of 40 units.
D) there would be a shortage of 20 units.
D
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If the price of salt increases and the quantity demanded does not change, then
A) the price elasticity of demand is equal to zero. B) demand is perfectly inelastic. C) the demand curve for salt is horizontal. D) Both answers A and B are correct.
Given a nominal interest rate of 8 percent, in which of the following cases would you earn the highest after-tax real interest rate?
a. Inflation is 5 percent; the tax rate is 40 percent. b. Inflation is 4 percent; the tax rate is 30 percent. c. Inflation is 3 percent; the tax rate is 45 percent. d. Inflation is 2 percent; the tax rate is 50 percent.