Figure 3.6 -Assume That the Market Described by the Demand and Supply

question 55

Multiple Choice

Figure 3.6

-Assume that the market described by the demand and supply curves in Figure 3.6 is originally in equilibrium. What is the most likely consequence of a government-imposed price ceiling at $10 per unit?

• A) Supply will decrease.
• B) Demand will increase.
• C) Quantity supplied will decrease.
• D) There will be a surplus of the good.
• E) There will be no consequence at all.

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Definitions:

Trade-In Allowance

The amount credited to the buyer by the seller when the buyer gives a product as part of the payment for a new product.

Book Value

The net value of a company's assets as recorded on its financial statements, minus its liabilities and intangible assets.

Recorded

The process of entering financial transactions into accounting records.

Long-Lived Assets

Assets that are expected to provide economic benefits to a business for a period longer than one year, such as buildings, machinery, and equipment.