When a government imposes price controls, the result is that
A) the rationing function of prices is not allowed to function freely.
B) the price system operates more efficiently.
C) all trades are as mutually beneficial to each party as possible.
D) scarcity usually disappears.

Question

Quizplus · Accepted Answer

When price controls are imposed, the rationing function of prices is disrupted. This means that the market is not able to allocate goods and services efficiently based on supply and demand. Instead, some consumers may be able to buy a product at a lower price than others, leading to shortages or surpluses. Therefore, price controls often result in market inefficiencies and unintended consequences.

When a Government Imposes Price Controls, the Result Is That