What are the major problems that will tend to arise if there are legal limits on the movement of prices?
A)Favoritism and corruption of officials and market participants
B)Unenforceability of laws and higher costs of transactions
C)Increasing restrictions to enforce the laws
D)Misallocation of resources as prices no longer correspond to costs
E)All of these responses are correct.

Question

Quizplus · Accepted Answer

Legal limits on prices can lead to all of the problems listed, including favoritism and corruption as individuals try to find ways around the restrictions, unenforceability of laws since markets may naturally fluctuate, increasing restrictions to try and enforce the laws, and misallocation of resources as prices no longer accurately reflect costs.

What Are the Major Problems That Will Tend to Arise