Which of the following might cause a market to produce a quantity that is less than optimal?

Question

Quizplus · Accepted Answer

Market control by a monopolist can result in a quantity produced that is less than optimal because the monopolist can limit the supply and increase the price, maximizing their profits but reducing the quantity available to consumers. A price ceiling above the market equilibrium price would not affect the quantity produced, as the market would still be able to supply the equilibrium quantity at the ceiling price. A subsidy to low-income consumers may increase demand and result in a higher quantity produced, as producers may be incentivized to supply more to meet the increased demand.

Which of the Following Might Cause a Market to Produce