If a Price Ceiling of $8 Were Placed in the Market

question 98

Multiple Choice

If a price ceiling of $8 were placed in the market in the graph shown:

• A) some surplus is transferred from consumer to producer.
• B) some surplus is transferred from producer to consumer.
• C) all consumers are made better off.
• D) all producers are made better off.

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Definitions:

Relevant Range

The range of activity within which the assumptions made about cost behavior in cost-volume-profit analysis are valid.

Cost Estimates

A predictive calculation of the anticipated expenses for a project or production, used for budgeting and planning purposes.

Marginal Cost

The cost of producing one additional unit of a product or service.

Relevant Range

The range of activity or volume in which the assumptions about fixed costs and variable costs are valid.