When a Price Ceiling Is Imposed on a Competitive Market

question 39

Multiple Choice

When a price ceiling is imposed on a competitive market at a level equal to the equilibrium price:

• A)consumer surplus is increased.
• B)producer surplus is increased.
• C)both producer and consumer surplus is reduced.
• D)total surplus remains unchanged.

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Definitions:

Operating Activities

Transactions and other events related to the core business operations of a company, including revenue and expense transactions that affect the net income.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not included in cash equivalents.

Net Cash Flow

The difference between a company's cash inflows and outflows in a given period.

Quality of Income Ratio

A metric that measures the proportion of income that comes from core business operations, indicating the reliability of a company's earnings.