If a Good Is Subject to a Binding Price Ceiling

question 77

Multiple Choice

If a good is subject to a binding price ceiling and you purchase it on the black market,what do you expect to happen to the availability of the good over time?

• A) The availability of the good will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.(The shortage of the good will fall.)
• B) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will fall.)
• C) The availability of the good will fall over time as both the supply and demand curves become more elastic.(The shortage of the good will rise.)
• D) The availability of the good will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.(The shortage of the good will fall.)
• E) The availability of the good will not change over time.

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Definitions:

Accounts Receivable

Represents money owed to a business by its customers for goods or services delivered but not yet paid for, usually recoverable within a short period, like 30, 60, or 90 days.

Merchandise

Goods that are bought and sold within the retail industry.

Sales on Account

Transactions where goods or services are sold with the agreement that payment will be made at a later date, creating an account receivable.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.