Price ceilings that lead to shortages will impose costs on society because they:
A)will eliminate long waiting lines.
B)may result in black market prices, which are lower than the market-determined price would be.
C)lead to a smaller quantity offered on the market.
D)help businesses instead of consumers.

Question

Quizplus · Accepted Answer

Price ceilings that lead to shortages result in a smaller quantity offered on the market, which can lead to rationing, long waiting lines, or reduced quality of goods. This imposes costs on society as it reduces consumer surplus and diminishes overall welfare. Option A is incorrect because waiting in long lines is an inconvenience and leads to a time cost. Option B is incorrect because black market prices are higher than the market-determined price and lead to illegal activities that the society must bear. Option D is incorrect because price ceilings that lead to a shortage will hurt both consumers and businesses that cannot produce as much as they want at the lower price.

Price Ceilings That Lead to Shortages Will Impose Costs on Society