If a Price Floor Is Imposed at $15 Per Unit

question 40

Multiple Choice

If a price floor is imposed at $15 per unit when the equilibrium market price is $12,there will be

• A) no surplus or shortage.
• B) a surplus.
• C) a shortage.
• D) a downward pressure on prices.
• E) an upward pressure on prices.

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Definitions:

Futures Contract

A standardized legal agreement to buy or sell an asset at a predetermined price at a specified time in the future.

Portfolio's Beta

A measure of a portfolio's sensitivity to market movements, indicating how much the portfolio's value is expected to change with a change in the overall market.

S&P500 Value

Refers to the total market value of all stocks listed in the Standard & Poor's 500 Index, a commonly used representation of the U.S. equity market.

Futures Position

A commitment to buy or sell a specified amount of a commodity or financial instrument at a predetermined price at a specified time in the future.