Suppose That the Government Sets a Price Ceiling in the Market

question 81

Multiple Choice

Suppose that the government sets a price ceiling in the market for potatoes at $0.75 per pound of potatoes.If the equilibrium price of potatoes is $1.10,the result of the price ceiling will be a _____________ of potatoes and ____________ exchanges will be made with the price ceiling than would be made in a free market.

• A) shortage; fewer
• B) surplus; fewer
• C) shortage; more
• D) surplus; more

---

Definitions:

Journal Entries

The basic unit of accounting record that details a financial transaction, showing debits and credits to accounts impacted by the transaction.

Honoring

The act of fulfilling or adhering to agreements, commitments, or payments.

Dishonoring

Dishonoring occurs when a promised payment, such as a check or electronic payment, is not completed due to insufficient funds or rejection by the bank.

Note Receivable

A written promise for a specified amount of money to be paid by a debtor at a certain future date.