Refer to the graph shown. Which statement best characterizes the difference between the effect of a price ceiling in the short run and the long run?
A. A price ceiling of P0 will create a shortage of (Q3 ? Q0) in the short run and the long run.
B. A price ceiling of P0 will create a shortage of (Q4 ? Q0) in the short run and the long run.
C. A price ceiling of P2 will create a shortage of (Q3 ? Q1) in the short run, but a greater shortage of (Q3 ? Q0) in the long run.
D. A price ceiling of P2 will create a shortage of (Q3 ? Q0) in the short run and a smaller shortage of (Q3 ? Q1) in the long run.
Answer: C
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Refer to Figure 13-8. At the profit-maximizing output level the firm will
A) earn a profit of $60. B) break even. C) earn a profit of $176. D) earn a profit of $88.
With a monetary growth rule as proposed by the monetarists, during a recession the rate of growth of the money supply would
A) not change. B) increase. C) decrease. D) decrease or increase depending on economic conditions.