Two unrelated women are interested in opening a brokerage account. Each one wants to be able to enter trades in the account, but
1 answer:
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Answer:
A. Set above equilibrium price
Explanation:
A price ceiling is a mandatory maximum price that a seller is allowed to charge. Generally, a government may impose this in order to protect consumers, especially with regards to the purchase of essential goods.
If the price ceiling was set below the equilibrium price (option c) or if the equilibrium price is above the price ceiling (option b), it will immediately cause a shortage (option d) since the quantity demanded would be higher than the quantity supplied when the price falls. This is because people will be willing to purchase more since it is cheaper but suppliers will be willing to produce less due to lower profits. Hence, options b, c and d are eliminated.
Option A is correct because... (please refer attached diagram):
When the price ceiling is above the equilibrium price, suppliers are willing to supply more since they can make higher profits but consumers will reduce purchasing since it is expensive. However, it does not cause any immediate effect because it takes time for suppliers to be able to produce more and cannot be done immediately unless anticipated in advance. In the long run however, quantity demanded will fall from equilibrium quantity to D1 and quantity supplied will rise from equilibrium quantity to S1. Hence, causing a surplus between D1 - S1 in the long run.
Answer: = $2,731.14
Explanation:
First find the annual payment.
The payment will be constant so is an annuity.
Present Value of an Annuity = Payment * Present Value Interest Factor of an annuity
4,000 = Payment * PVIFA( 3 periods, 5%)
4,000 = Payment * 2.7232
Payment = 4,000 / 2.7232
Payment = $1,468.86
This annual Payment is divided into an interest component and a component going towards principal repayment.
Interest component = 5% * 4,000
= $200
Amount going to principal = 1,468.86 - 200
= $1,268.86
Amount of Principal Outstanding = 4,000 - 1,268.86
= $2,731.14
