Japancompany of isuz manufacture estimates that total variable cost willbe pound 200milon and total cost will be 2bilon in the coming year .in setting prices its assumed that sales will be 70 precent of the firm, s 175000veheicle -per -year capacitiy or 150 000units .the target rate return is 15 percent which is to earbed on an investment of pound 3billon .if price are set on cost -plus basis, wgat price shoud be charged for each isuzu?

answer; comparing the additional benefits and costs;

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.