If the Market Price of Green Tea Is $20

question 173

Multiple Choice

If the market price of green tea is $20.00 per pound and the government will not allow green tea growers to charge more than $25.00 per pound of green tea, which of the following will happen?

• A) Demand must eventually decrease so that the market will come into equilibrium at a price of $17.50.
• B) There will be a shortage of green tea.
• C) Supply must eventually increase so that the market will come into equilibrium at a price of $17.50.
• D) The price ceiling will be ineffective and the market will remain in equilibrium.

---

Definitions:

Present Value

The worth at present of a sum of money expected in the future or of ongoing cash payments, when discounted at a specific rate of return.

Capital Cost Allowance (CCA)

A form of tax depreciation that allows a business to deduct the cost of a depreciable property, such as buildings or equipment, over a number of years.

Fixed Assets

Long-term tangible pieces of property or equipment that a firm owns and uses in its operations to generate income.

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to commit their money.