When the Price of a Good Is Legally Set Below

question 69

Multiple Choice

When the price of a good is legally set below the equilibrium level, a shortage often results. This shortage

• A) is a temporary failure of the market mechanism.
• B) is the result of a shift in demand.
• C) is the result of a shift in supply.
• D) occurs because the price ceiling prevents the market mechanism from establishing an equilibrium price.

---

Definitions:

Identifiability

The capability to recognize, define, or distinguish assets and liabilities within a transaction or set of financial data.

AASB 138

A guideline issued by the Australian Accounting Standards Board that mandates how entities should account for and report on intangible assets.

Goodwill

The value of a company's brand name, solid customer base, good customer relations, good employee relations, and any patents or proprietary technology representing excess of purchase price over the fair market value of the net identifiable assets.

Business Combination

A transaction or event in which an acquirer gains control of one or more businesses.