When policymakers impose price controls, they
A) are usually following the advice of mainstream economists.
B) usually improve the efficiency of economic activity.
C) distort the signals that normally guide the allocation of resources.
D) demonstrate a willingness to sacrifice equity in order to improve efficiency.

Question

Quizplus · Accepted Answer

Price controls, such as price ceilings and floors, interfere with the natural functioning of the market, leading to distortions in resource allocation and often resulting in shortages or surpluses.

When Policymakers Impose Price Controls, They