A price floor set above an equilibrium price tends to cause persistent imbalances in the market because
a. Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.
b. Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus.
c. Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage.
d. Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.
D
You might also like to view...
Suppose that international trade is the only kind of international transaction between the United States and Canada. The United States currently is experiencing a balance of trade deficit with Canada. What would happen to the United States and Canadian money supplies if the United States and Canada both used the gold standard?
A) The U.S. money supply would rise and the Canadian money supply would fall. B) Both the U.S. and Canadian money supplies would rise. C) The U.S. money supply would fall and the Canadian money supply would rise. D) Both the U.S. and the Canadian money supplies would fall.
When trade occurs among nations with similar tastes, technology, products, and costs, monopolistically competitive firms will have an incentive:
a. to lower prices to get new customers and increase market share. b. to raise prices to take advantage of a lucrative situation. c. to cut corners in manufacturing to boost profits. d. to raise quality, so they can charge a higher price than the competition.