If a legal ceiling price is set above the equilibrium price:
A. a shortage of the product will occur.
B. a surplus of the product will occur.
C. a black market will evolve.
D. neither the equilibrium price nor the equilibrium quantity will be affected.
Answer: D
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Suppose that the U.S. imposes a countervailing duty of 10% on coated paper imported from China to offset alleged Chinese subsidies. Suppose further that the U.S. duty-free price of Chinese coated paper imports is $500 per 1,000 meter roll and that the price of an equivalent roll of U.S.made coated paper is $600 per 1,000 meter roll. What is the U.S. government's estimate of the dollar value of the Chinese subsidies?
a. $50 per 1,000 meter roll b. $60 per 1,000 meter roll c. $50 to $60 per 1,000 meter roll d. $100 per 1,000 meter roll
Suppose that consumers decide to save less and spend more. What effect would this have in the market for loanable funds?
A. It will decrease interest rates and the quantity of funds lent will rise. B. It will decrease interest rates and the quantity of funds lent will fall. C. It will increase interest rates and the quantity of funds lent will fall. D. It will increase interest rates and the quantity of funds lent will rise.