Price Ceilings

question 45

Multiple Choice

Price ceilings:

• A) improve the allocation of resources because consumers with the greatest need for the product are more likely to afford the product.
• B) misallocate resources because consumers who buy the product may not be the ones who value it the most.
• C) misallocate resources because they allow consumers to compete against one another by offering sellers higher prices.
• D) improve the allocation of resources because consumers are prevented from bidding up the price of products.

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Definitions:

Accounts Receivable Turnover

A financial metric that measures how effectively a company collects debts from its customers over a period, indicating the efficiency of credit policies and collection efforts.

Net Credit Sales

The net sales of a company, calculated by subtracting returns, discounts, and allowances for damaged or missing merchandise from the total sales.

Ending Balance

The difference between footings in a T account.

Asset Turnover Ratio

A ratio that indicates how efficiently a company uses its assets to generate sales and thus helps measure the overall efficiency of the company.