Asked by Brooke Rupert on Jul 05, 2024
Verified
A price ceiling below the equilibrium price is likely to result in a persistent _____,a transfer of surplus from _____,and _____ deadweight loss.
A) surplus;producers to some consumers;some
B) shortage;producers to some consumers;some
C) shortage;some consumers to producers;no
D) surplus;some consumers to producers;some
Price Ceiling
A government-imposed limit on how high a price is charged for a product, service, or commodity, intended to protect consumers from high prices.
Persistent Shortage
A situation where the demand for a good or service consistently exceeds its supply, over a significant period of time.
Deadweight Loss
The loss of economic efficiency when the equilibrium for a good or a service is not achieved or is not achievable.
- Understand specific inefficiencies caused by binding price ceilings and floors, like persistent shortages and surpluses.
Verified Answer
ZK
Zybrea KnightJul 07, 2024
Final Answer :
B
Explanation :
A price ceiling below the equilibrium price will result in a shortage because the quantity supplied will be less than the quantity demanded. This will lead to a transfer of surplus from producers to some consumers who are able to purchase the product at the lower price. However, there will be some deadweight loss as the quantity exchanged will be less than the optimal level. Therefore, both A and D are incorrect. On the other hand, C is incorrect because there will be a shortage and not a surplus. Therefore, the correct answer is B.
Learning Objectives
- Understand specific inefficiencies caused by binding price ceilings and floors, like persistent shortages and surpluses.