A Price Cap Is a Price ________

question 102

Multiple Choice

A price cap is a price ________.A price cap might be a more effective way of regulating monopoly than rate of return regulation because under rate of return regulation,________.

• A)ceiling;a firm incurs an economic loss
• B)floor;price is set equal to marginal cost
• C)ceiling;the firm's managers have an incentive to inflate costs
• D)floor;the firm's managers have an incentive to purchase more than the efficient quantity of capital
• E)floor;the firm's managers have an incentive to inflate costs

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Definitions:

Accounts Receivables

The amounts of money owed to a company by customers for goods or services that have been delivered or used but not yet paid for.

Negotiable Instrument

A document in writing that promises to pay a certain sum of money, either upon request or at a predetermined date, with the person responsible for payment identified on the document.

Delivered

Refers to goods, documents, or other items that have been transported and handed over to the person they were intended for.

Conditional Endorsement

An endorsement whereby payment can be made only on the fulfillment of a predecided condition, such as painting one’s house.