Price controls
A)are always popular with consumers because they lower prices.
B)create shortages.
C)increase producer surplus because firms can now sell a greater quantity of a good at a lower price.
D)are necessary to preserve equity.

Question

Quizplus · Accepted Answer

Price controls, such as price ceilings, often lead to shortages because the artificially low price discourages suppliers from producing or supplying as much of the good or service as consumers demand, which creates a mismatch between supply and demand. This can result in long waiting lines or rationing of the scarce commodity, which means that not everyone who wants the product can obtain it. Price controls are not a reliable way to ensure equity or social justice, as they can distort markets and lead to unintended consequences.

Price Controls