Suppose that the market equilibrium price for a good is $3.00. A nonbinding price ceiling in this market will result in a price
set Choose one:A. below $3.00.B. above $3.00.C. More information is needed to determine the answer.D. at $3.00.
2 answers:
Answer:
A) below $3.00
Explanation:
In order for a price ceiling to be binding, it must be set below the market's equilibrium price. A binding price ceiling results in a supply shortage because the total quantity demanded will increase, while the total quantity supplied will decrease. The economic loss resulting from the shortage is known as deadweight loss.
The deadweight loss is represented on the attached graph as the area below the demand curve and above the supply curve, and left of the equilibrium price.
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Answer:
Answer is explained in the explanation section below.
Explanation:
Part A: In part a, we are required to show the effects on the financial statements using horizontal statements model.
For that, we need to tabulate the entries properly. So, it cannot be done be done here in the typing section. So, I m putting it into the attachments. Please refer to the attachment for the part a solution.
Part B:
Reason of the difference:
Cash revenue is $8650 but cash flow amount is $9600
Total operating expense incurred is $3350 but the amount paid only $2700
It will create $650 difference income statement and cash flow.
These activities are reasons for the differences between cash flow from the operating activity and net income.
