The Table Given Below Reports the Quantity Demanded and Supplied

question 98

Multiple Choice

The table given below reports the quantity demanded and supplied of a commodity at different prices in a market. Table 3.5


-Refer to Table 3.5.
If government imposes a price ceiling of $4:

• A)the price ceiling will not have an effect.
• B)the price will fall to $1 because producers will be forced to incur losses.
• C)demand will increase.
• D)a surplus will result equal to 20 units.
• E)a shortage will result equal to 20 units.

---

Definitions:

Contribution Margin

The amount remaining from sales revenues after all variable expenses are paid, contributing towards covering fixed costs and profit.

Discontinue

To stop making or providing a product or service, often as a strategic decision by a company.

Sunk Cost

Expenses that have already been incurred and cannot be recovered or altered, which should not affect future business decisions.

Materials Costs

The expense incurred by acquiring raw materials necessary for producing goods, excluding indirect materials like maintenance supplies.