Scenario: Consider the Following Figure, Which Shows a Competitive Market

question 74

Multiple Choice

Scenario: Consider the following figure, which shows a competitive market. Suppose the government imposes a price ceiling policy of $2 on this market.

-Refer to the above scenario.After the imposition of this $2 price control policy,what is the amount of producer surplus in the market?

• A) 0
• B) $30
• C) $50
• D) $75

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Definitions:

Notes Receivable

Written promise (as evidenced by a formal instrument) for amounts to be received.

Retained Earnings

Net income that the corporation retains for future use.

Operating Expenses

Expenses incurred through the normal operations of a business, including rent, utilities, and salaries, but excluding costs of goods sold.

Vertical Analysis

A financial analysis method that lists each line item in a single period financial statement as a percentage of a base line figure.