Government price controls

Question

Quizplus · Accepted Answer

Government price controls can have various unintended consequences, and it is not uncommon for them to create more problems than they solve. They remove the fundamental principle of supply and demand, which is a crucial factor in establishing prices in a market economy. As a result, prices may end up being higher or lower than they would be in a free market, which can cause shortages or surpluses of goods. Additionally, price controls can harm the very people they are intended to help by creating shortages, encouraging black markets, and reducing investment and innovation. Therefore, all of the above statements are correct.

Government Price Controls