-Refer to the Diagram Above

question 126

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,consumer surplus _________ and is now represented by the area _______.

• A) decreases;BJEH
• B) increases;BAEH
• C) decreases;JAE
• D) increases;GAEF
• E) does not change;BAC

Assess the impact of changes in market conditions on equilibrium price and quantity.

Understand the role of government interventions in the market, such as taxes, price floors, and price ceilings.

Analyze how taxes affect market outcomes and the burden of tax on buyers and sellers.

Understand the concept of elasticity and how it affects the burden of taxation.

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Definitions:

Presentment

The act of presenting an instrument to the party liable on the instrument to collect payment; the act of presenting an instrument to a drawee for acceptance.

Negotiable

Referring to instruments or documents whose rights or monetary value can be transferred to another individual through endorsement or delivery.

Nature

The phenomena of the physical world collectively, including plants, animals, the landscape, and other features and products of the earth, as opposed to humans or human creations.

Instrument

A formal legal document that serves as evidence of a fact or a right, and can include negotiable instruments in financial transactions.