A Price Floor Set Above an Equilibrium Price Tends to Cause

question 118

Multiple Choice

A price floor set above an equilibrium price tends to cause persistent imbalances in the market because

• A) Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.
• B) Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus.
• C) Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage.
• D) Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.

Calculate the maximum external price acceptable in outsourcing scenarios.

Understand the concept of bank reserves and the difference between required and excess reserves.

Calculate required reserves for a bank based on its demand and time deposits.

Analyze the composition of bank deposits and how they impact reserve requirements.

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Definitions:

Share Price

The price of a single share of a company's stock in the stock market.

Consistent Dividends

Regular and predictable payments made by a company to its shareholders out of its profits.

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over a period, to identify trends and changes.