How Do Producers Who Are Subject to a Binding Price

question 124

Multiple Choice

How do producers who are subject to a binding price ceiling respond as the time frame shifts from the short run to the long run?

• A) Producers are increasingly willing to substitute away from producing the good,and their elasticity of supply becomes less elastic.
• B) There are no changes,and elasticity of supply remains unchanged.
• C) Producers are increasingly willing to substitute away from producing the good,and their elasticity of supply becomes more elastic.
• D) Producers are less willing to substitute away from producing the good,and their elasticity of supply becomes less elastic.
• E) Producers are less willing to substitute away from the good,and their elasticity of supply becomes more elastic.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances in temporary accounts to permanent accounts, preparing the books for the next period.

Zero Balance

Zero balance describes an account status in which the available balance is exactly zero, indicating no funds are currently available or outstanding.

Current Assets

Assets that are expected to be converted into cash, used, or consumed within one year or the operating cycle, whichever is longer.

Long-term Investments

Investments in securities or other assets that a company intends to hold for a period exceeding one year to earn revenue or profit.