What are the outcomes of price controls

Question

Quizplus · Accepted Answer

Price controls, whether it be a price ceiling or price floor, can lead to shortages or surpluses. A price ceiling, which sets a maximum price for a good/service, can result in a shortage if the ceiling is below the market equilibrium price. A price floor, which sets a minimum price for a good/service, can lead to a surplus if the floor is above the market equilibrium price. This is because price controls interfere with the natural workings of supply and demand, creating imbalances in the marketplace. Therefore, option D is the correct answer.

What Are the Outcomes of Price Controls