Currently, 100,000 Units of a Good Are Traded on a Market

question 42

Multiple Choice

Currently, 100,000 units of a good are traded on a market. The government imposes a limit of a maximum of 50,000 units that may be traded on the market. This will:

• A)create excess supply.
• B)create excess demand.
• C)raise price.
• D)have no effect on the market.

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Definitions:

Tax Rate

The level at which a person or business's income is subjected to taxation.

Bonds at Par Value

Bonds that are sold or traded at their original issuing price or face value.

Equity Financed

Refers to the method of raising capital for a business by selling ownership shares in the company, as opposed to incurring debt.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity.