Which of the Following Would Result from a Price Support

question 28

Multiple Choice

Which of the following would result from a price support program when the support price is set above the equilibrium price,ceteris paribus?

• A)Output would decline.
• B)The price paid by consumers would rise.
• C)The consumption of the product would rise.
• D)Quality would deteriorate.

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Definitions:

Convertible Bond

A fixed-income debt security that the holder can convert into a specified number of shares of common stock in the issuing company.

Conversion Price

The dollar amount of a bond’s par value that is exchangeable for one share of stock.

Conversion Value

The value of a convertible security if it were converted into a different asset, typically shares of the issuing company's stock.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically represented by the yield on government securities.