Refer to the Figure Below

question 86

Multiple Choice

Refer to the figure below. Suppose a law is passed requiring restaurants to charge no more than $25 per meal. This law would:

• A)decrease producer surplus.
• B)increase producer surplus.
• C)have no effect on producer surplus.
• D)have an ambiguous effect on producer surplus.

---

Definitions:

Consignment

The process of placing goods with a third party who has the authority to sell the goods on behalf of the owner, but the ownership of the goods remains with the consignor until sold.

Inventory Valuation

A method used to assess the cost or market value of inventories a company holds at the end of a period.

Inventory Accounting

The method of accounting that focuses on the valuation, recording, and management of inventory, including the cost of goods sold.

Goods Available for Sale

The total quantity of goods that a company has on hand and can sell at any given time, including both finished goods and those still in production.