Price controls on resources generally lead to surpluses.

Question

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Price controls on resources usually lead to shortages because the controlled price may be artificially low, which encourages consumers to demand more of the resource than is available at that price. This situation creates a surplus of demand for the resource, which may lead to rationing or waiting lists. Additionally, producers may be discouraged from producing the resource because the controlled price may be lower than the cost of production, and may opt to use their resources for another more profitable venture, leading to a decrease in supply.

Price Controls on Resources Generally Lead to Surpluses