A Price Floor

question 22

Multiple Choice

A price floor

• A) changes the equilibrium price if it is imposed in black markets.
• B) changes the price and quantity if it is set below the equilibrium price.
• C) changes the price and quantity if it is set above the equilibrium price.
• D) does not create a black market if it is set above the equilibrium price.
• E) changes the price and quantity only if it equals the equilibrium price.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.

Interest Accrual

A process where interest that has been earned or incurred but not yet paid is recognized and recorded within accounting periods.

Accounts Payable Turnover Ratio

A financial ratio that measures how quickly a company pays off its suppliers by dividing the total purchases by the average accounts payable.

Suppliers

Entities that provide goods or services to another entity, typically within a supply chain.