The Price of a Good or a Service Can Be

question 29

Multiple Choice

The price of a good or a service can be determined by free interaction of demand and supply or by a government price regulation.One important difference between these two price- determining methods is

• A)one is capitalist and the other is communist.
• B)there are no shortages or surpluses at the free- market equilibrium price.
• C)the government is in the best position to know the needs of the people.
• D)that a regulated price above the equilibrium price will always result in shortages.
• E)regulated prices are fairer since more people can then afford the goods or services.

---

Definitions:

Annual Dividend

The total dividend payment a shareholder receives from a company in one year.

Debt-Equity Ratio

A gauge illustrating the mix between shareholder equity and debt in a company’s asset-financing strategy.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, reflecting the expected cost of all available funding sources.

Weight of Preferred Stock

The proportion of preferred stock in a company’s capital structure, used in calculating the cost of capital or investment risk.