With Respect to Some Commodity, X, If Government Objectives Are

question 96

Multiple Choice

With respect to some commodity, X, if government objectives are to (1) restrict production and (2) keep prices down to protect consumers, then legislated price ceilings will

• A) be a dismal failure as neither goal can ever be achieved with price ceilings.
• B) satisfy both goals as long as a black market does not develop.
• C) only have an effect on commodities at the international level.
• D) satisfy only the second goal if a black market develops.
• E) satisfy both goals but only if a black market develops.

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The extra return expected by an investor for holding a risky asset rather than a risk-free asset.

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The costs incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

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Funds raised by a company in exchange for shares of ownership in the company.

Component Cost

The rate of return required by investors for each component of a company's capital structure.