Which of the following is true regarding a price support set above the equilibrium price?
i. The price support increases the price consumers pay.
ii. The price support creates a deadweight loss.
iii. The price support decreases output.
A) i and ii
B) i and iii
C) iii only
D) i, ii, and iii
E) i only
A
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Indicate whether the statement is true or false
Consider an industry with two firms producing similar products. Each firm's total cost (in dollars) is given below. Mega Corp: TC = 5,000 + 100Q Big Inc: TC = 4,000 + 200Q If each firm is producing 15 units, you would expect:
A. Big Inc to be able charge a lower price than Mega Corp. B. Mega Corp to be able charge a lower price than Big Inc. C. Both Mega Corp and Big Inc to reduce output and charge higher prices. D. both firms to continue to produce 15 units.