Suppose the government imposes a price ceiling on gasoline that is less than the equilibrium price. As a result
A) the price of gasoline rises to the equilibrium price.
B) there is incentive for buyers to undertake search activity.
C) the supply of gasoline will increase and the supply curve will shift rightward.
D) the demand for gasoline will decrease and the demand curve will shift leftward.
B
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Refer to Figure 4-13 which shows the market for watermelons. Suppose the government imposes a price floor of Pw. How will the price floor affect the quantity supplied, quantity demanded, and quantity exchanged?
What will be an ideal response?
Which of the following formulas accurately reflects this graph?
a. P* ($8) ? ATC ($7) ? q* (100) = $100
b. P* ($8) + ATC ($7) ? q* (100) = $1,500
c. P* ($8) ? ATC ($7) ÷ q* (100) = $.01
d. P* ($8) + ATC ($7) ÷ q* (100) = $.15