Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
a. the demand curve for physicals shifts to the right.
b. the supply curve for physicals shifts to the left.
c. the quantity demanded of physicals increases and the quantity supplied of physicals decreases.
d. the number of physicals performed will increase.
C
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Graphically, producer surplus is the:
A) difference between the demand curve and the price a consumer pays. B) difference between the supply curve and the price a consumer pays. C) difference between total cost and total revenue. D) product of price of a good and quantity sold.
Refer to the above figure. We are currently producing at point c. Which of the following statements is TRUE?
A) Resources are not being efficiently utilized. B) Resources are being efficiently utilized. C) The only way to produce more of Goods X or Y is to have an increase in the amount of resources. D) The Law of Increasing Additional Cost does not hold.