Suppose the Government Imposes a Price Ceiling on Gasoline That

question 381

Multiple Choice

Suppose the government imposes a price ceiling on gasoline that is less than the equilibrium price. As a result

• A) the price of gasoline rises to the equilibrium price.
• B) there is incentive for buyers to undertake search activity.
• C) the supply of gasoline will increase and the supply curve will shift rightward.
• D) the demand for gasoline will decrease and the demand curve will shift leftward.

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Definitions:

Owner's Equity

The residual interest or ownership claim in the assets of an entity after deducting its liabilities.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders’ equity at a specific point in time.

Liabilities

Financial obligations or debts a company owes to external parties or entities.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, financial activities, and investment activities.