If the Intended Aim of the Price Ceiling Set at $6

question 113

Multiple Choice

If the intended aim of the price ceiling set at $6, as shown in the graph, was a net increase in the well-being of consumers, then positive analysis would conclude that the policy was:

• A)effective because the surplus gained by consumers through lower prices is greater than the surplus they lost due to fewer transactions taking place.
• B)ineffective because the surplus gained by consumers through lower prices is less than the surplus they lost due to fewer transactions taking place.
• C)effective because the surplus lost by producers through lower prices is less than the surplus gained by consumers through lower prices.
• D)ineffective because the amount of deadweight loss is greater than the surplus gained by consumers from lower prices.

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Definitions:

Valuation Techniques

Methods used to estimate the value of an asset, liability, or company, incorporating various financial models and approaches.

Non-recurring Measurements

Financial assessments that are unusual or infrequent and not expected to happen often in the future.

Corresponding Asset

An asset that is directly related or linked to another activity or transaction, often in financial reporting or accounting.

Provision For Warranties

An estimate of future costs related to repairing or replacing products under warranty, recognized as a liability on the balance sheet.