A Price Cap Is a Price ________

question 102

Multiple Choice

A price cap is a price ________.A price cap might be a more effective way of regulating monopoly than rate of return regulation because under rate of return regulation,________.

• A)ceiling;a firm incurs an economic loss
• B)floor;price is set equal to marginal cost
• C)ceiling;the firm's managers have an incentive to inflate costs
• D)floor;the firm's managers have an incentive to purchase more than the efficient quantity of capital
• E)floor;the firm's managers have an incentive to inflate costs

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Definitions:

Sales Dollars

Sales dollars refer to the total monetary value of all sales transactions made by a company over a period, without deducting any costs or expenses.

Break-Even Point

The sales level at which a business generates revenue equal to its expenses, resulting in neither profit nor loss.

Variable Costs

Financial obligations that shift depending on the level of manufacturing or sales activity.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, like lease payments and wages.