Which of the Following Best Represents the Misallocation of Resources

question 38

Multiple Choice

Which of the following best represents the misallocation of resources that would occur under a price ceiling on bottled water following a major hurricane?

• A) Bottles of water sit on the shelves because nobody can afford it.
• B) A family in a distant state takes time off work to bring bottled water to the hurricane-ravaged area.
• C) A family in a distant state gives bottled water to its dog, but a family in the hurricane area cannot find bottled water to drink.
• D) Families in the hurricane area brush their teeth with bottled water but cannot find enough to drink.

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Definitions:

Statement Of Financial Position

The statement of financial position, commonly known as the balance sheet, reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

Current Liabilities

Obligations or debts that a company needs to settle within one fiscal year or its operating cycle, whichever is longer.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts, or financial statements, is represented as a proportion of the total account.

Net Income

The amount by which revenues exceed expenses.