Consider the above table. Assuming the government imposes a price ceiling on garbanzo beans of $4, what would be the likely result?
A) a surplus of 2,000 garbanzo beans
B) a shortage of 2,000 garbanzo beans
C) No change, equilibrium would prevail.
D) The quantity demanded of garbanzo beans would fall to zero.
B
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A manufacturer of grenade launchers estimates that the probability of a fatal accident caused by the design of its product is 1/80,000 and the value of a life lost is $2 million
The manufacturer can change the design to eliminate that chance for $20 per grenade launcher and is prepared to incorporate all cost-justified precautions. Will the manufacturer change the design? What would the benevolent social planner think about the manufacturer's decision if the true value of a life is actually $1.5 million?
Have market forces failed in keeping healthcare costs under control?
a. Yes; in most high-income countries healthcare is a socialized industry and costs have been kept low. b. Yes; the government has allowed market forces to determine costs, yet healthcare spending continues to rise rapidly. c. No; government regulations have undermined the operation of markets and created perverse incentives that have led to rising prices and soaring healthcare expenditures. d. No; market forces have been allowed to determine costs and those costs have remained low relative to the consumer price index.