PRICE 20 18 16 14 12 10 8 6 2 Demand B Supply Demand A 369 9 12 15 18 21 24 27 30 QUANTITY

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter20: The Problem Of Adverse Selection Moral Hazard
Section: Chapter Questions
Problem 3MC
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Refer to Figure 6-7. Which of the following statements is not correct?

  a. A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a nonbinding price ceiling if market demand is Demand B.  
  b. A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B.  
  c. A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B.  
  d. A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B 
PRICE
20
18
16
14
12
10
8
6
4
2
Demand B
3
Supply
Demand A
69 12 15 18 21 24 27 30
QUANTITY
Transcribed Image Text:PRICE 20 18 16 14 12 10 8 6 4 2 Demand B 3 Supply Demand A 69 12 15 18 21 24 27 30 QUANTITY
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