Which statement is TRUE in a market with a price ceiling?
A) Buyers and sellers experience unexploited gains from trade.
B) Resources are allocated to their most efficient uses.
C) The supply of goods is sold by the sellers with the lowest costs.
D) The supply of goods is bought by the buyers with the highest willingness to pay.

Question

Quizplus · Accepted Answer

With a price ceiling in place, the price of the goods or services is set below the market equilibrium. This leads to excess demand or shortage of goods. Buyers and sellers still have the incentive to trade, but due to the price ceiling, they are unable to do so. This means that there are unexploited gains from trade in the market, which is the characteristic of a market with a price ceiling.

Which Statement Is TRUE in a Market with a Price