If Sanctions Are Imposed on Buyers but NOT on Sellers

question 54

Multiple Choice

If sanctions are imposed on buyers but NOT on sellers of an illegal good, then the equilibrium price ________ and the equilibrium quantity ________.

• A) rises; increases
• B) rises; decreases
• C) falls; increases
• D) falls; decreases

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Definitions:

Minimum Required Rate

The lowest acceptable return on investment or performance measure that a company or investor expects to achieve.

Operating Assets

Resources owned by a business that are used in its day-to-day operations to generate income.

Residual Income

Income that remains after subtracting all the cost of capital from the net operating profit.

Investment Opportunity

Any vehicle through which funds can be invested to potentially earn a return, such as stocks, bonds, real estate, or a business venture.