In the context of price controls, what term best describes the amount of money a business thinks it should charge for its product or service?

• A. Equilibrium price
• B. Price ceiling
• C. Market price
• D. Desired price

Answer: (D)

Verified step by step guidance

1. Understand the context: Price controls refer to government-imposed limits on the prices that can be charged for goods or services, such as price ceilings (maximum prices) or price floors (minimum prices).
2. Identify the terms given: 'Equilibrium price' is the price where quantity demanded equals quantity supplied; 'Price ceiling' is a legal maximum price; 'Market price' is the actual price at which goods are sold in the market.
3. Focus on the phrase 'the amount of money a business thinks it should charge' — this refers to the price set by the business based on its own considerations, not necessarily the market or regulated price.
4. Recognize that 'Desired price' is the term that best fits this definition, as it represents the price a business aims to charge before market or regulatory influences.
5. Therefore, the term describing the amount a business thinks it should charge is 'Desired price', distinguishing it from equilibrium, market, or controlled prices.