Which of the Following Correctly Identifies a Problem with Price

question 263

Multiple Choice

Which of the following correctly identifies a problem with price regulation?

• A) It minimizes social surplus.
• B) It minimizes consumer surplus.
• C) Sellers do not have an incentive to cut costs.
• D) Government intervention increases deadweight loss.

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Definitions:

Investment Opportunity Set

The set of available investment choices available to an investor, considering their risk tolerance and time horizon for investing.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation, a creditor relationship with a governmental body or a corporation, or rights to ownership as represented by an option.

Nonsystematic Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or diversifiable risk. Systematic risk refers to risk factors common to the entire economy.

Diversifiable Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or nonsystematic risk. Nondiversifiable risk refers to systematic or market risk.