Price ceilings reduce quality because:

Question

Quizplus · Accepted Answer

Price ceilings set maximum prices that sellers can charge for goods or services, which often results in excess demand. When there is excess demand, sellers cannot raise prices to increase profit. As a result, they may cut costs to maintain a profit margin, which could reduce quality. Therefore, price ceilings reduce quality because sellers are constrained from raising prices to cover the costs of producing high-quality goods or services.

Price Ceilings Reduce Quality Because