If the Government Removes a Binding Price Floor from a Market,then

question 22

Multiple Choice

If the government removes a binding price floor from a market,then the price received by sellers will

• A)decrease,and the quantity sold in the market will decrease.
• B)decrease,and the quantity sold in the market will increase.
• C)increase,and the quantity sold in the market will decrease.
• D)increase,and the quantity sold in the market will increase.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing what is sacrificed as a result of choosing one option over another.

Sunk Cost

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

Indirect Cost

A cost that cannot be easily and conveniently traced to a specified cost object.

Cost Of Goods Sold

The total cost directly associated with producing the goods sold by a company, including materials and labor.