Refer to the Accompanying Figure

question 72

Multiple Choice

Refer to the accompanying figure.If there is a $700 government-imposed price antigouging law imposed on generators,how will the market be affected in the short run?

• A) There will be a shortage of 200 generators.
• B) There will be a shortage of 100 generators.
• C) The government will intervene and order a surplus of 100 generators.
• D) Price gougers will enter the market and provide a surplus of 100 generators.
• E) No changes will occur in the market,since anti-price-gouging laws are now in effect.

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Definitions:

Investment

A placement of capital in expectation of deriving income or profit.

Return on Investment

A measure used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments.

Deferred Tax Liability

A tax obligation owed by an entity in the future due to temporary differences between the book value of assets and liabilities and their tax value.

Income Tax Expense

The expense reported on the income statement that represents the amount of income tax a company owes to governmental authorities.