Suppose That the Equilibrium Price in the Market for Widgets

question 190

Multiple Choice

Suppose that the equilibrium price in the market for widgets is $5.If a law reduced the maximum legal price for widgets to $4,

• A) any possible increase in consumer surplus would be larger than the loss of producer surplus.
• B) any possible increase in consumer surplus would be smaller than the loss of producer surplus.
• C) the resulting increase in producer surplus would be larger than any possible loss of consumer surplus.
• D) the resulting increase in producer surplus would be smaller than any possible loss of consumer surplus.

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Definitions:

Outstanding Checks

Checks that have been written and recorded in the accounting books but not yet cashed or cleared by the bank.

Automatic Transfer

A banking service that automatically moves funds from one account to another at scheduled times or under specific conditions.

Adjusted Cash Balance

The cash amount shown on a company's books after adjustments have been made for checks outstanding, deposits in transit, and other discrepancies.

Check Register

A record kept by an individual or institution to track checks written, deposits made, and the current balance of a checking account.