If the Equilibrium Price of Good X Is $5 and a Price

question 126

Multiple Choice

If the equilibrium price of good X is $5 and a price ceiling is imposed at $4, the result will be a(n) :

• A) accumulation of inventories of unsold gas.
• B) shortage.
• C) surplus.
• D) quantity supplied that exceeds the quantity demanded.

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Definitions:

Net Income

The net income of a business following the subtraction of all costs and taxes from its earnings.

Absorption Costing

A costing method that integrates all expenses related to the manufacturing process, including direct materials, direct labor, and overhead costs, both variable and fixed, into the final product cost.

Required Rate

Often refers to the minimum expected rate of return on an investment, taking into account the risk level.

Markup

The amount added to the cost of a product to cover expenses and profit, resulting in the selling price.