Do Consumers Benefit If Government Sets a Price Ceiling in a Market

question 38

Multiple Choice

Do consumers benefit if government sets a price ceiling in a market?

• A)No, because government regulations always injure consumers.
• B)No, because consumer surplus decreases.
• C)Yes, because consumer surplus increases.
• D)Yes, because consumers will pay a lower price.

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Definitions:

Margin Required

The minimum amount of funds that must be deposited with a broker when borrowing to buy securities or entering into a futures contract, serving as collateral.

Over-the-counter

A decentralized market, without a central physical location, where participants trade stocks, commodities, currencies, or other instruments directly between two parties and not through a central exchange.

Securities Market

The Securities Market is a marketplace where financial instruments like stocks, bonds, and derivatives are issued and traded, facilitating capital flow and investment.

Underwriting Syndicate

A group of financial institutions that work together to issue new securities to the public, sharing the risk associated with the underwriting process.