Suppose a product is characterized by linear downward-sloping...
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Suppose a product is characterized by linear downward-sloping
demand curve and linear upward-sloping supply curve, the market is initially in equilibrium. Then the government imposes a binding price floor, then the
price control
(I) causes the quantity demanded to decrease, relative to the initial equilibrium.(II) causes the producer surplus to increase, relative to the initial equilibrium.(III) results in some firms being more successful than others in selling their goods.❌
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