Price ceilings would create all of the following effects EXCEPT:
A) shortages.
B) reductions in product quality.
C) a misallocation of resources.
D) maximum gains from trade.

Question

Quizplus · Accepted Answer

Price ceilings create shortages and a misallocation of resources as they prevent the market from reaching equilibrium. They may also lead to reductions in product quality as producers try to cut costs. However, price ceilings do not allow for maximum gains from trade as they distort the market and may lead to black markets or other illegal activities.

Price Ceilings Would Create All of the Following Effects EXCEPT