If the Equilibrium Price of Gasoline Is $4

question 58

Multiple Choice

If the equilibrium price of gasoline is $4.00 per gallon and the government will not allow oil companies to charge more than $3.00 per gallon of gasoline, which of the following will happen?

• A) Demand must eventually decrease so that the market will come into equilibrium at a price of $3.00.
• B) Supply must eventually increase so that the market will come into equilibrium at a price of $3.00.
• C) A nonprice rationing system such as ration coupons must be used to ration the available supply of gasoline.
• D) The market will be in equilibrium at a price of $3.00.

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Definitions:

Unamortized Discount

The portion of a bond issuance discount that has not yet been expensed to interest over the bond’s life.

Journal Entry

A record in accounting that notes the details of a financial transaction.

Face Value

The nominal value of a security stated by the issuer, which is the amount to be repaid at maturity in the case of a bond or the value represented by each share of stock.

Retired Bonds

Bonds that have been paid off or bought back by the issuer before or at maturity, effectively removing them from existence and relieving the issuer of further obligations.