In Order to Be Binding,a Price Floor

question 122

Multiple Choice

In order to be binding,a price floor

• A)must lie above the free-market equilibrium price.
• B)must lie below the free-market equilibrium price.
• C)must coincide with the free-market equilibrium price.
• D)must be high enough for firms to earn a profit.

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Definitions:

Cash Sales

Transactions in which the buyer pays for a good or service at the time of the sale with cash or its equivalent.

Cost of Merchandise

The total expense incurred by a business to buy or produce the goods it has sold during a specific period.

Credit Memo

A Credit Memo is a document issued by a seller to a buyer, reducing the amount that the buyer owes to the seller, typically due to a return or an overpayment.

Perpetual Inventory

A system for managing inventory that instantly logs inventory sales or purchases via computerized point-of-sale systems and software for enterprise asset management.