When the Government Imposes an $8 Price Ceiling on a Good

question 12

Multiple Choice

When the government imposes an $8 price ceiling on a good that would have had a $10 equilibrium price without the ceiling,

• A) surpluses are created.
• B) supply will increase to meet the demand.
• C) excess demand occurs.
• D) quantity demanded of the good will fall.

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Definitions:

Tax-Deductible

Expenses that can be subtracted from gross income to reduce the amount of income that is subject to taxation.

Bond Principle

The face value of a bond or the amount that the issuer agrees to pay the bondholder upon the maturity of the bond.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, taking into account both interest payments and capital gains or losses.

Coupon Rate

The interest rate on a bond that the issuer promises to pay to the bondholder until maturity.