A Price Floor Policy Establishes a Minimum Price for a Market

question 93

Multiple Choice

A price floor policy establishes a minimum price for a market. Which of the following results from a binding price floor?

• A) Equilibrium
• B) Excess demand
• C) Excess supply
• D) Shortage

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Definitions:

Equivalent Annual Annuity

The constant annual cash flow for a certain period of time that has the same present value as a series of different cash flows.

Mutually Exclusive

Refers to scenarios where the acceptance of one alternative means the other cannot be chosen.

NPV

NPV (Net Present Value) is a calculation used to assess the profitability of a project or investment by summing the present values of all cash inflows and outflows associated with it.

Replacement Chain Method

A decision analysis for evaluating the replacement of assets, considering the optimal time to replace each asset.