Which of the following is true?
i.A price support is inefficient.
ii.A price floor set above the equilibrium price creates a surplus.
iii.A price ceiling set above the equilibrium price creates a black market.
A) only i
B) only ii
C) only iii
D) i and ii
E) ii and iii

Question

Quizplus · Accepted Answer

Price supports and floors set above equilibrium create inefficiencies in the market by preventing the market from clearing, leading to surpluses. A price ceiling above equilibrium does not create a black market; it's when it's set below equilibrium that shortages and black markets are more likely to occur.

Which of the Following Is True