-Refer to the Diagram Above

question 167

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.The triangle FEC represents the

• A) value of the trades that will be made after the price ceiling is imposed.
• B) reduction in producer surplus due to the price ceiling.
• C) increase in total economic surplus due to the price ceiling.
• D) the value of the trades that are not made after the price ceiling is imposed.
• E) reduction in consumer surplus due to the price ceiling.

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation in which an asset's book value is reduced by twice the rate of straight-line depreciation.

Straight-Line Rate

The Straight-Line Rate refers to a method of calculating depreciation or amortization by evenly allocating the cost of an asset minus its salvage value over its useful life.

Depreciation Method

A systematic approach to allocating the cost of a tangible asset over its useful life.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, including balance sheet, income statement, and cash flow statement.