If a Price Floor Is Set at $23 in the Market

question 48

Multiple Choice

If a price floor is set at $23 in the market shown in the graph:

• A)some consumers would lose because they will pay a higher price.
• B)some producers would gain because they will sell at a higher price.
• C)the quantity traded in the market would fall.
• D)All of these are correct.

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Definitions:

Revenue Recognition

This is an accounting principle that outlines the specific conditions under which revenue is recognized and can be reported in financial statements.

Percentage-Of-Completion Method

The percentage-of-completion method is an accounting approach used for recognizing the revenue and expenses of long-term contracts based on the progress of the work performed.

Revenue Recognition

The process of recording income when it is earned and realizable, according to specific criteria, regardless of when the cash is received.

Completed-Contract Method

An accounting method where revenue and profit are recognized only when a contract is completed, commonly used in long-term project contracts.