Why Do Price Ceilings Tend to Cause Persistent Imbalances in the Market

question 83

Multiple Choice

Why do price ceilings tend to cause persistent imbalances in the market?

• A)Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.
• B)Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus.
• C)Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage.
• D)Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus.

Understand the limitations of official unemployment statistics.

Understand the definition and measurement of inflation through various indexes like CPI.

Understand and identify different types of unemployment and their implications.

Comprehend the inflation rate calculation and its significance.

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Definitions:

Required Rate

The minimum return that investors expect to earn when they invest in a project, often used as the discount rate in capital budgeting.

Straight-line Depreciation

A method for dispersing the cost of a physical asset across its useful life in even annual allocations.

Discounted Payback

A capital budgeting method used to determine the profitability of an investment by calculating the time it takes for the present value of cash flows to cover the initial investment cost.

Annual Cash Flows

The total amount of money being transferred in and out of a business, considered on a yearly basis.