Asked by Ciara Lawrence on Jul 05, 2024
Verified
Which inefficiency is NOT caused by price floors?
A) inefficiently low quality
B) inefficient allocation of sales among sellers
C) wasted resources
D) illegal activity
Price Floors
Legally established minimum prices for goods or services, intended to ensure they cannot be sold below a certain price.
Inefficiently Low Quality
A situation where a product or service is produced with a quality level that is not optimal for consumer satisfaction or cost efficiency.
Wasted Resources
Resources that are not utilized in an efficient manner, often leading to economic inefficiency or loss.
- Understand the influence of price regulations on market inefficiencies.
Verified Answer
WJ
William JackmanJul 10, 2024
Final Answer :
A
Explanation :
Price floors, such as minimum wage laws or agricultural price supports, can lead to various inefficiencies like surplus, wasted resources, and inefficient allocation among sellers. However, they do not directly cause inefficiently low quality; this issue is more associated with price ceilings, which can lead to shortages and reduced incentives for quality improvement.
Learning Objectives
- Understand the influence of price regulations on market inefficiencies.