A price ceiling usually results in a _____ misallocation of resources.

Question

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A price ceiling is a government-mandated maximum price that can be charged for a good or service. When the price ceiling is set below the equilibrium price, it creates a shortage of the good or service because suppliers are no longer able to cover their costs and are therefore unwilling to supply as much as consumers demand. This results in a misallocation of resources because the good or service is not being produced and consumed as efficiently as it could be.

A Price Ceiling Usually Results in a _____ Misallocation of Resources