A government sets a maximum price for fruit below the market price to try to encourage healthier eating.
All other things being equal, which one of the following will result in the lowest amount of excess demand for fruit at the maximum price?
1 )
Demand is income elastic and supply is price elastic.
2 )
Demand is income inelastic and supply is price inelastic.
3 )
Demand is price elastic and supply is price elastic.
Demand is price inelastic and supply is price inelastic.
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