Which of the following is NOT true when market distortions (e.g. ,price ceilings,price floors,or taxes)are introduced into the market?
A) Total economic surplus is reduced.
B) A deadweight loss of some magnitude occurs.
C) Trades that should occur do not or trades that should not occur do.
D) Equity is always improved.
E) Efficiency is reduced

Question

Quizplus · Accepted Answer

The statement "Equity is always improved" is not true when market distortions are introduced into the market. While some types of market distortions may be intended to improve equity, such as progressive taxation, others may actually reduce equity, such as when price ceilings benefit consumers at the expense of producers. The other statements are generally true when market distortions are introduced.

Which of the Following Is NOT True When Market Distortions