Assume that your state government has placed a price ceiling of .20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is .25. The government's action will result in
A) a surplus of electricity in the electricity market.
B) an increase in the price of electricity to .25 per kilowatt hour.
C) an increase in producer surplus.
D) a deadweight loss.
Question 2
A major purpose of tariffs is to
A) encourage imports.
B) encourage exports.
C) discourage imports.
D) discourage exports.
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