Price Ceilings

question 55

Multiple Choice

Price ceilings:

• A) cause quantity to be higher than in the market equilibrium.
• B) always increase consumer surplus.
• C) may decrease consumer surplus if demand is sufficiently elastic.
• D) may decrease consumer surplus if demand is sufficiently inelastic.
• E) always decrease consumer surplus.

Understand the impact of inventory management on gross profit and net income.

Know the proper accounting for goods out on consignment and goods in transit.

Identify the categories of inventory for a manufacturing business.

Comprehend the accounting principle of conservatism as it applies to inventory.

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Definitions:

Spending Multiplier

The spending multiplier is an economic concept that measures the effect of a change in autonomous spending (such as government expenditure or investment) on the total economic output.

Potential Output

Potential Output refers to the highest level of goods and services an economy can produce sustainably, without triggering inflation.

Government Securities

Government-issued securities designed to fund government spending while providing investors with a profit.

Discount Rate

The interest rate charged by central banks on loans they provide to commercial banks, influencing monetary policy and the money supply.