Price Ceilings and Price Floors That Are Binding

question 189

Multiple Choice

Price ceilings and price floors that are binding

• A)are desirable because they make markets more efficient and more fair.
• B)cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
• C)can have the effect of restoring a market to equilibrium.
• D)are imposed because they can make the poor in the economy better off without causing adverse effects.

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Definitions:

Operating Costs

Expenses associated with the day-to-day operation of a business, excluding financing costs and taxes.

Useful Life

The estimated period over which an asset is expected to be usable for its intended purpose, affecting its depreciation.

Machine

Equipment or apparatus designed to perform a specific task in the manufacturing process.

Present Value

The immediate worth of anticipated money or streams of cash flows, computed with an agreed-upon rate of return.