A binding price ceiling results in:
A)inefficiency resulting from overproduction of the good.
B)inefficiency because transactions are held below the equilibrium quantity.
C)a decrease in wasted resources,as consumers find such goods more easily.
D)surpluses in the market,which eventually lead to inefficient production costs.

Question

Quizplus · Accepted Answer

A binding price ceiling sets the price of the good below the equilibrium price, causing a shortage as quantity demanded exceeds quantity supplied. This results in inefficiency because transactions occur below the equilibrium quantity, causing potential gains from trade to not be realized. There may also be other inefficiencies such as reduced incentives for producers to produce and inferior quality goods on the market.

A Binding Price Ceiling Results In