Which of the Following Statements Is TRUE? Price Floors Set

question 70

Multiple Choice

Which of the following statements is TRUE? Price floors set above the equilibrium price cause: I. shortages. II. surpluses. III. deadweight losses.

• A) I and III only
• B) II and III only
• C) III only
• D) I is true if demand is elastic, however II is true if demand is inelastic.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume such as materials and labor.

Type Of Cost

Classification of cost based on nature, function, or behavior in relation to the production or delivery of goods and services.

Type Of Cost

A category within accounting that relates to the nature of expenses incurred, such as fixed, variable, direct, or indirect costs.

Plant Expansion

The process or activity of increasing the capacity or size of a manufacturing facility.