If a price floor on coffee is set above the market-clearing price, then
A) the quantity of coffee demanded will decrease.
B) the quantity of coffee supplied will increase.
C) the quantity demanded for coffee will increase.
D) Both A and B will occur
E) none of the above will occur.
Question 2
A Pigouvian subsidy leads to a socially efficient outcome by ________.
A) raising individuals' marginal benefit from consumption
B) lowering the marginal private cost of production
C) raising the marginal external benefit from consumption
D) lowering the marginal external cost of production
Morning Coffee
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