Suppose that a major hurricane hits Florida, causing widespread damage to homes and businesses. If the legislature imposes price controls in order to keep reconstruction costs reasonable, which of these is the MOST likely result?

Question

Quizplus · Accepted Answer

When price controls are imposed, the demand for building materials will increase due to a lower price, but the supply will decrease, as suppliers will be reluctant to sell their products at a lower price. This will eventually lead to a shortage of building materials, making it harder and more expensive to rebuild after the hurricane.

Suppose That a Major Hurricane Hits Florida, Causing Widespread Damage