A price ceiling is
A) the lowest price a seller can charge without losing all of its customers.
B) a legal minimum price below which a good or service cannot be sold.
C) a legal price above which a good or service cannot be sold.
D) a nonprice rationing device.
Answer: C
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If a central bank does not want to allow the domestic currency to depreciate, it will ________ international reserves by purchasing its currency, thereby ________ the monetary base and increasing the risk of higher unemployment
A) lose; decreasing B) lose; increasing C) acquire; decreasing D) acquire; increasing
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Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each company's stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50 percent chance that it will be colder than average next year, and a 25 percent chance that it will be warmer than average. If you purchase one share of ABC stock and one share of XYZ stock, your expected gain will be ________.
A. $15 B. $0 C. $10 D. $40