Which of the following statements are true about price controls used by some local governments?
A) Price controls are imposed to increase market efficiency.
B) Price controls seem to be a very effective way to reduce inequities.
C) Price controls are put into place when it is thought that the market price is in some way unfair or inequitable.
D) All of the above statements are true.

Question

Quizplus · Accepted Answer

Price controls are put into place when it is thought that the market price is in some way unfair or inequitable. Price controls may limit the ability of producers to earn profits or reduce the supply of goods, which can lead to inefficiencies. While they are intended to make goods more affordable, they often have the opposite effect of creating shortages and reducing quality. Research suggests that in the long run, price controls are a poor tool for addressing market inefficiencies.

Which of the Following Statements Are True About Price Controls