Will a price ceiling always result in a reduction in efficiency?

What will be an ideal response?


Not always. A price ceiling only results in inefficiency if it is effective-if it causes the market price to fall below the equilibrium price. If the price ceiling's maximum price is above the equilibrium price, the price ceiling is ineffective and does not cause market inefficiencies.

Economics

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In the Cournot model, if the products are differentiated

A) this reduces the pressure of one firm's decisions on the other. B) this increases the pressure of one firm's decisions on the other. C) there is no difference between this model and one with homogeneous goods. D) marginal costs are necessarily different.

Economics

Incrementalism makes sense from a politician's perspective, because _____

a. it keeps all government employees happy b. it eliminates the cost of preparing a budget c. it maximizes political support by giving all special interests something d. they want to be seen in favor of bigger government

Economics

Dissaving occurs when:

a. disposable income is greater than consumption. b. consumption is greater than disposable income. c. consumption is equal to disposable income. d. consumption is greater than personal income. e. consumption is less than personal income.

Economics

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market

Economics