Price Ceilings

question 45

Multiple Choice

Price ceilings:

• A) improve the allocation of resources because consumers with the greatest need for the product are more likely to afford the product.
• B) misallocate resources because consumers who buy the product may not be the ones who value it the most.
• C) misallocate resources because they allow consumers to compete against one another by offering sellers higher prices.
• D) improve the allocation of resources because consumers are prevented from bidding up the price of products.

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Definitions:

Cash Sales

Transactions in which goods or services are paid for in full using cash at the time of sale.

Cash Register Tapes

Physical records produced by cash registers, documenting transactions completed.

Refund Liability

An obligation to return funds to customers, recorded as a liability on the balance sheet, reflecting the company's expectation to refund some portion of sales.