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Consider the Market for Pulp and Paper

Question 3

Multiple Choice

Consider the market for pulp and paper.Suppose,in an attempt to help this industry,the government sets a price floor above the free-market equilibrium price.The result will be


A) a continuation of the market-determined equilibrium price and quantity.
B) the quantity demanded will exceed quantity supplied and there will be a shortage in the market.
C) the quantity supplied will exceed quantity demanded and there will be a surplus in the market.
D) a new free-market equilibrium at a higher price and lower output level.
E) increased government revenue.

Correct Answer:

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