Normally, to the extent that a governmental control mechanism succeeds in affecting price, it can be expected to lead to a corresponding
A)reduction in the volume of sales only if the price is forced down.
B)reduction in the volume of sales if the price is forced down and an increase in the volume of sales if the price is forced up.
C)decrease in the volume of sales whether the price is forced up or down.
D)increase in the volume of sales whether the price is forced up or down.

Question

Quizplus · Accepted Answer

Governmental control mechanisms, such as price ceilings or taxes, typically result in a decrease in the volume of sales, regardless of whether the price is forced up or down. This is because the control mechanism creates a distortion in the market that disrupts the balance between supply and demand, leading to inefficiencies and reduced market activity. Consumers may be discouraged from purchasing the product at the higher price, or producers may be unwilling or unable to produce the product at the lower price, resulting in a reduction in sales.

Normally, to the Extent That a Governmental Control Mechanism Succeeds