Once search and waiting costs are taken into account, price ceilings can cause consumers to spend more for a good than if prices were unregulated.

Question

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When price ceilings are imposed, the price of a good is typically set below the market equilibrium price. This can lead to shortages and long waiting times for consumers, who may have to spend time and effort searching for the good. This adds to the total cost of the good, so even though the price is lower, consumers may end up spending more overall.

Once Search and Waiting Costs Are Taken into Account, Price