Which of the following is true in markets where price controls are applied?
A) Price controls distort the incentives faced by both buyers and sellers.
B) Price controls clarify the incentives faced by both buyers and sellers.
C) Price controls increase the number of exchanges that will occur.
D) Price controls are enacted solely with consumers' interests in mind.
A) Price controls distort the incentives faced by both buyers and sellers.
You might also like to view...
Which approach to calculating GDP is computed using compensation of employees, rental income, profits, net interest, indirect business taxes, and depreciation?
a. The expenditure approach. b. The income approach. c. The product-market approach. d. The circular-flow approach.
If, in a given market of multiple producers, there is a positive gap between price and average cost (P > AC) for an extended period of time, this would suggest that
A. there are many sellers in the industry. B. there exists an oligopoly or cartel in the industry. C. this is a contestable market. D. the firm cannot be a monopolistic competitor.
The problem of moral hazard arises because
a. life is full of all sorts of risks. b. after people buy insurance, they have less incentive to be careful about their risky behavior. c. a high-risk person is more likely to apply for insurance than is a low-risk person. d. insurance companies go to great effort to avoid paying claims to their policy holders.
A producer's minimum acceptable price for a particular unit of a good:
A. is the same for all units of the good. B. will, for most units produced, equal the maximum that consumers are willing to pay for the good. C. equals the marginal cost of producing that particular unit. D. must cover the wages, rent, and interest payments necessary to produce the good but need not include profit.