Author Question: Suppose the market-clearing price of milk is 3.00 per gallon, but consumer groups persuade the ... (Read 66 times)

K@ · **on:** Jun 29, 2018

Suppose the market-clearing price of milk is 3.00 per gallon, but consumer groups persuade the government to set and enforce a maximum price cap at 2.00 per gallon. The newly legislated price tends to

A) create a surplus of milk.
B) increase the demand for milk.
C) reduce the supply of milk.
D) do all of the above.
E) do none of the above.

Question 2

The above figure shows the U.S. market for 1 carat diamonds. Area C is the

A) decrease in consumer surplus due to the import quota.
B) importers' profit from the quota.
C) deadweight loss from the import quota.
D) increase in producer surplus due to the import quota.
E) gain in total surplus due to the import quota.