Whenever a Price Floor Is Imposed Above Equilibrium Price, It

question 137

Multiple Choice

Whenever a price floor is imposed above equilibrium price, it is true that:

• A)​supply will increase due to a higher price and a surplus will result.
• B)​supply will increase due to a higher price until it just equals the quantity demanded.
• C)​demand will increase due to a higher price and a shortage will result.
• D)​quantity supplied will exceed the quantity demanded.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses and taxes from its total revenues.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating the amount contributed toward covering fixed costs and generating profit.

Units Sold

The total number of a product's units that have been sold during a certain period.

Variable Costing

A costing method that includes only variable production costs in the cost of goods sold and treats fixed costs as period expenses.