Which Statement About the Undesirable Side Effects of a Quantity

question 105

Multiple Choice

Which statement about the undesirable side effects of a quantity control is NOT correct?

• A)Quantity controls do not lead to deadweight loss.
• B)Some mutually beneficial transactions do not occur because of quantity controls.
• C)Quantity controls provide incentives for illegal activities.
• D)Quantity controls cause a wedge between the demand price and supply price.

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Definitions:

Market Equilibrium

A situation where the quantity of a good or service supplied equals the quantity demanded, leading to a stable market price.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing their net benefit.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to market balance.

Mutually Beneficial Trades

Exchanges between parties that provide benefits or gains to all involved, enhancing their welfare or utility.