If government sets the ceiling price below the competitive price, which of the following effects is NOT TRUE? A. Consumer demand more than the equilibrium quantity. B. Firms supply less than equilibrium quantity. C. Producer surplus increases. D. Consumer surplus increases. 9
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Assume a market is currently at the equilibrium price and quantity, and a price ceiling is set below equilibrium price. Which of the following statements is true: Select the correct answer below: A. The quantity demanded will rise and the quantity supplied will fall, causing a shortage. B. There is nothing causing the price to fall from the equilibrium level. C. There is nothing preventing the price from rising to its equilibrium level. D. The quantity supplied will rise and the quantity demanded will fall, causing a surplus.
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In a perfectly competitive market for cheese with downward sloping demand and upward sloping supply, the equilibrium price is $12 per kilo. If the government imposes a price ceiling of $10, we can conclude that the government policy will: Select one: a. reduce the number of units sold only if demand is elastic b. decrease producer surplus and decrease total surplus c. reduce the number of units sold only if demand is inelastic d. decrease producer surplus but increase total surplus e. increase producer surplus but decrease total surplus
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