Exhibit 4-8 Refer to Exhibit 4-8.  Suppose That Wheat Producers  Lobby the Government for the Government

question 8

Multiple Choice

Exhibit 4-8
Refer to Exhibit 4-8.  Suppose that wheat producers  lobby the government for a price floor and receive one.  This price floor is set at P_F.  What has happened to the consumers' surplus as a result of the imposition of the price floor?

• A)consumers' surplus has gone down by (area 2 + 4)
• B)consumers' surplus has risen by (area 2 + 4)
• C)consumers' surplus has gone down by (area 3 - area 5)
• D)consumers' surplus has risen by (area 2 + 3)

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Definitions:

Capital Projects Fund

Capital Projects Fund is a type of government accounting fund used to track the financial resources used for the acquisition and construction of major capital assets.

Agency Fund

A fund used by a government to account for resources held in a trustee capacity for individuals, private organizations, or other government units.

Governmental Entities

Organizations that operate on the government's behalf, including departments, agencies, and authorities, responsible for implementing policy and managing public sector resources.

Accounting Principles

Accounting Principles are the rules and guidelines that companies must follow when reporting financial data, ensuring consistency, reliability, and comparability of financial statements.