Assume an Industry Initially in Equilibrium Has a Price Floor

question 220

Multiple Choice

Assume an industry initially in equilibrium has a price floor imposed at a price above the equilibrium price. Total revenue received by the producers from sales will:

• A)​rise as a result.
• B)​rise as a result only if supply is elastic.
• C)​rise as a result only if demand is elastic.
• D)​rise as a result only if demand is inelastic.

Analyze the impact of changing input costs on the efficiency of firm operations.

Recognize key decisions firms make regarding technology and production inputs.

Understand the connection between isocost lines, input prices, and total cost.

Learn about isoquants and how movement across isoquants reflects changes in production output and input usage.

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Definitions:

Dividend

A portion of a company's earnings that is paid to shareholders, typically on a quarterly basis, as decided by the board of directors.

Cost Of Capital

The necessary yield a business needs to achieve on investment endeavors to preserve its market capitalization and secure capital.

Discount Rate

The interest rate used to determine the present value of future cash flows or to evaluate the attractiveness of an investment.

Opportunity Cost

The cost of an alternative that must be forgone in order to pursue a certain action, essentially the benefits you could have received by taking another course of action.