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2 points 13
2 points 13. Which of the following is TRUE about the effect of a government-imposed price floor when the price floor being set is above the market equilibrium price? * Consumer surplus will increase. O All firms will gain. O There will be a product shortage. O Consumer surplus will decrease.
2 points 15. Information about a firm's production costs at a particular output level are given below: Total variable costs $ 7200 Average fixed costs $ 20 Average total costs $ 100 What is the firm's output? * O 60 units. 72 units. 90 units. It cannot be computed based on the information provided.
Expert Solution
Answer
13. The correct answer is D.
if govt sets a price above equilibrium price, the consumer surplus will fall or decrease as they now need to pay than the market equilibrium price due to price flooring.
15.
The correct answer is C.
ATC = AVC + AFC
100 = AVC + 20
AVC = $80
Average variable cost =
total variable cost/output
80 = 7200/output
output = 90 units
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