Which of the following statements about price ceilings is TRUE? I. Price ceilings cause quantity demanded to exceed quantity supplied. II. When including time costs and bribes, consumers pay a total price in excess of the price ceiling. III. All else equal, it is more wasteful to allocate goods based on bribes than on waiting time costs.
A) I only
B) II and III only
C) I and II only
D) I, II, and III

Question

Quizplus · Accepted Answer

Statement I is true because a price ceiling sets the maximum price below the equilibrium price, which leads to excess demand. Statement II is also true because consumers might have to pay additional costs such as bribes or time waiting in line to obtain the good or service. Statement III is not directly related to price ceilings and is not necessarily true.

Which of the Following Statements About Price Ceilings Is TRUE