Government price controls
A) ensure that transactions take place at a fair price.
B) inform consumers what is the maximum price they should pay.
C) usually set upper or lower limits on prices.
D) act as a guideline to producers as to what is a fair price.
E) ensure that the actual price is at its free- market equilibrium.

Question

Quizplus · Accepted Answer

Government price controls usually set upper or lower limits on prices, rather than ensuring transactions take place at a fair price or informing consumers what the maximum price should be. They may act as a guideline for producers, but their primary purpose is to regulate prices in some way. Price controls do not necessarily ensure that the actual price is at its free-market equilibrium, as they can distort the market and create shortages or surpluses.

Government Price Controls