Why Are Binding Price Ceiling Laws Passed

question 97

Multiple Choice

Why are binding price ceiling laws passed?

• A) They make goods more expensive (and profitable)for firms.
• B) They encourage sellers to produce more of a good.
• C) They encourage producers to sell higher-quality products.
• D) They permit customers to obtain higher-quality products.
• E) They make a good less expensive for those customers who are able to purchase the good in the legal market.

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Definitions:

Contingent Liability

A potential financial obligation that may arise in the future, depending on the outcome of a certain event.

Financial Statements

A set of formal documents tracking the financial activities, status, and cash flows of a business, providing insight into its financial health over a specified period.

Accrual

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Interest Expense

The amount an entity pays for the use of borrowed funds throughout a certain duration.