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19 Aug 2018

1. A price floor is: (a) The legal maximum price at which a good or service may be sold. (b) The legal minimum price at which a good or service may be sold. (c) The minimum price at which sellers will be willing to sell a good or service. (d) The maximum price that consumers are willing to pay for a good or a service.

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Elin Hessel
Elin HesselLv2
19 Aug 2018
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Related questions

7) Indicate whether each of the following statements is true or false, and explain why.

A. Producer surplus tends to fall as the supply curve becomes more elastic.

B. Consumer surplus tends to rise as demand becomes more elastic.

C. The market demand curve indicates the minimum price buyers are willing to pay at each level of production.

D. The market supply curve indicates the minimum price required by sellers as a group to bring forth production.

E. Consumer surplus is the amount that consumers are willing to pay for a given good or service above and beyond the amount actually paid.

A legal maximum on the price at which a good can be sold is called a price:Ā 
Ā 
(i) floor.Ā 
(ii) ceiling.
(iii) subsidy.
(iv) support.

Ā 

Select the correct answer:

A (legal; natural) monopoly exists when one firm can meet the entire market demand at a lower average total cost than two or more firms could.

A monopoly that is able to sell different units of a good or service for different prices is a (natural-price; price-discriminating) monopoly.

The act of obtaining special treatment by the government to create an economic profit is called (government surplus; rent seeking).

Regulated firms have an incentive to inflate their costs under (rate of return; price cap) regulation.

The U.S. Postal Service has a (natural; legal) monopoly on first class mail delivery.

A (single-price; price discriminating) monopoly maximizes profit by producing the quantity at which marginal revenue equals marginal cost and then charging the maximum price that consumers are willing to pay for that quantity.

The key idea behind price discrimination is to convert (consumer surplus; producer surplus) into economic profit.

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