Prohibiting price increases in situations of true scarcity could best be described as
A)interfering with the "law" of supply and demand.
B)thwarting the "law" of increasing returns to scale.
C)violating the "law" of increasing cost.
D)interfering with the "law" of diminishing marginal utility.

Question

Quizplus · Accepted Answer

Prohibiting price increases in situations of true scarcity would interfere with the "law" of supply and demand, which states that as the supply of a good or service decreases (or the demand increases), the price will naturally increase to achieve market equilibrium. By prohibiting price increases, this law is being interfered with and could potentially lead to further shortages and an inefficient allocation of resources.

Prohibiting Price Increases in Situations of True Scarcity Could Best