-Refer to the Diagram Above

question 90

Multiple Choice

-Refer to the diagram above.Assume that a price ceiling is imposed at point G,i.e. ,the price is now represented by the distance 0G.After the price ceiling is imposed,producer surplus _________ and is now represented by the area _______.

• A) increases;DBC
• B) decreases;DGF
• C) increases;0GFQ₂
• D) decreases;0DFQ₂
• E) does not change;DGF

---

Definitions:

Price-earnings Ratio

A valuation metric for companies, representing the ratio of a company's share price to its per-share earnings.

Earnings per Share

A financial ratio indicating the proportion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.

Stock Dividend

A form of dividend payment made by a company to its shareholders in the form of additional shares, rather than cash.

Large Stock Dividend

A dividend payment made in the form of additional shares rather than cash, usually representing a significant increase in a company's share base.