Total Surplus in a Market Will Increase When the Government

question 11

Multiple Choice

Total surplus in a market will increase when the government

• A)imposes a binding price floor or a binding price ceiling on that market.
• B)imposes a tax on that market.
• C)Both a and b are correct.
• D)Neither a nor b is correct.

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Definitions:

Book Value

The net value of a company's assets as recorded on the balance sheet, excluding intangible assets like goodwill.

Fair Value

Fair Value is the estimated market value of an asset or liability, based on current prices in an open market, used for financial reporting.

Gain Recognized

The profit that is realized and reported on the financial statements when an asset is sold for more than its carrying amount.

Transfer Date

The specific date on which the ownership or control of an asset is transferred from one party to another.