Tampering with the price mechanism
A)can be efficient for a while.
B)cannot be attempted in a market economy.
C)can enhance societal welfare if done properly.
D)often produces undesired side effects.

Question

Quizplus · Accepted Answer

Tampering with the price mechanism often produces unintended consequences, such as shortages or surpluses, misallocation of resources, and reduced incentives for production or consumption. While it may provide short-term benefits, the negative effects typically outweigh the positive ones in the long run. In a market economy, the price mechanism plays a crucial role in efficiently allocating scarce resources, and distorting it can lead to inefficiencies and market failures. Therefore, it is not a recommended approach for enhancing societal welfare.

Tampering with the Price Mechanism