Price ceilings are adopted in most cases because
A) the government views the current equilibrium price as too high for consumers.
B) the government wants to create surpluses.
C) the government favors a non-intervention policy.
D) producers need incentives to produce more of the good or service.
Answer: A
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All of the following are examples of spending on factors of production in the circular flow model except
A) Bima hires two students to work at his ice-cream store. B) Iris buys a dozen roses for her mother's birthday. C) "Get Fit Together" purchases 3 new treadmills for its gym. D) The Banyan Tree rents a much larger property so that it can add a restaurant to its facilities.
Refer to Figure 23.4 for a perfectly competitive market and firm. Which of the following is likely to occur in the market in the long run, ceteris paribus?
A. An increase in demand. B. An increase in supply. C. A decrease in demand. D. A decrease in supply.