Use the Following to Answer Questions

question 313

Multiple Choice

Use the following to answer questions:
Figure: Price Ceilings and Consumer Valuation
-(Figure: Price Ceilings and Consumer Valuation) Refer to the figure. Suppose a price ceiling of $3 goes into effect. What is the loss of consumer surplus due to the random allocation of price-controlled goods compared to the allocation only to the highest-value users?

• A) $90
• B) $60
• C) $150
• D) $30

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Definitions:

Market Values

The present rate at which a service or asset is available for purchase or sale on the market.

Adjusting Entry

An accounting entry made in the journals at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred.

Common Stock

A type of equity security that represents ownership in a corporation, with rights to share in its profits through dividends and capital appreciation.

Sold Shares

Refers to the act of transferring ownership in a corporation's stock from one party to another in exchange for money or other compensation.