If a Price Floor Is Imposed at $15 Per Unit

question 40

Multiple Choice

If a price floor is imposed at $15 per unit when the equilibrium market price is $12,there will be

• A) no surplus or shortage.
• B) a surplus.
• C) a shortage.
• D) a downward pressure on prices.
• E) an upward pressure on prices.

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Definitions:

Probability

The quantification of the probability of an event happening, expressed as a numeric value ranging from 0 to 1.

Hurdle Rate

The minimum rate of return on an investment required by a manager or investor to proceed with the project.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of investments.

Variance

A measure of the spread of a set of values, calculated as the average of the squared deviations from the mean.