Suppose the Government Decides to Eliminate a Binding Price Floor

question 70

Multiple Choice

Suppose the government decides to eliminate a binding price floor that it had previously imposed on a particular good.It can be expected that

• A)the price would increase,the quantity demanded would decrease and the quantity supplied would increase.
• B)the price would increase,the quantity demanded would increase and the quantity supplied would decrease.
• C)the price would decrease,the quantity demanded would decrease and the quantity supplied would increase.
• D)the price would decrease,the quantity demanded would increase and the quantity supplied would decrease.
• E)no changes would take place.

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Definitions:

Worksheet

A paper or electronic tool used by accountants to gather information for adjusting entries and preparing financial statements.

Trial Balance

A list of accounts and their balances at a given time.

Terms 2/10 N/30

Terms 2/10 N/30 is a commercial credit term indicating that a buyer can deduct 2% of the invoice amount if payment is made within 10 days; otherwise, the full invoice amount is due in 30 days.

Invoice Paid

A financial transaction where an invoice has been settled or fulfilled, indicating that the billed goods or services have been paid for by the recipient.