Use the Following to Answer Questions

question 300

Multiple Choice

Use the following to answer questions:
Figure: Price Controls
-(Figure: Price Controls) Refer to the figure. Which price control would cause a shortage of 20 units of the good?

• A) a price ceiling of $10
• B) a price floor of $10
• C) a price ceiling of $6
• D) a price floor of $6

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Definitions:

Graphical Representation

A visual way of presenting data, information, or statistical results using charts, graphs, or other imagery.

Discounted Payback

A method to evaluate the profitability of an investment by calculating the time it takes for the net present value of cash flows to equal the initial investment cost.

Required Return

The minimum expected return on an investment necessary to compensate for the risk taken by the investor, including the time value of money and inflation.

Payback

A method of investment appraisal that calculates the time needed for an investment to generate cash flows sufficient to recover the initial outlay.