-Refer to the Above Figure

question 112

Multiple Choice

-Refer to the above figure. Other things being equal, when the government imposes a price floor at P₂, then we would expect

• A) the quantity demanded is Q₂.
• B) a surplus will occur.
• C) price to decline until an equilibrium is achieved at P₀.
• D) consumers to bid against each other for goods and force the price even higher.

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Definitions:

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall value of the company does not change.

Retained Earnings

Retained Earnings represent the cumulative amount of net income earned by a company that is reinvested in the business, not distributed to shareholders as dividends.

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period and must be paid out before dividends to common stockholders.

Cash Dividend

A payment made by a company out of its earnings to shareholders in the form of cash.