Government intervention in the form of binding price floors or binding price ceilings will:
A)always enhance the efficiency of the market.
B)result in either surpluses or shortages.
C)move the market toward its equilibrium quantity more quickly.
D)often be seen as necessary to decrease the activity of black markets.

Question

Quizplus · Accepted Answer

Binding price floors or ceilings create a distortion in the market and will often result in either surpluses or shortages, as the price is forced away from the equilibrium price. This can lead to inefficiency and potential waste, as well as a misallocation of resources.

Government Intervention in the Form of Binding Price Floors or Binding