A market with price ceilings fails to maximize all of the following EXCEPT:
A) the gains from trade.
B) consumer surplus.
C) excess supply.
D) producer surplus.

Question

Quizplus · Accepted Answer

Price ceilings lead to excess demand, not excess supply. Instead, it leads to shortages and rationing of the good, resulting in under production and allocation of resources, leading to a loss of efficiency. Therefore, price ceilings fail to maximize efficiency but may still allow for gains from trade, consumer surplus, and producer surplus to exist.

A Market with Price Ceilings Fails to Maximize All of the Following