Which of the Following Statements Best Characterizes the Loss of Total

question 201

Multiple Choice

Which of the following statements best characterizes the loss of total economic surplus induced by a price ceiling?

• A) Trades that would have occurred in an unregulated market do not occur.
• B) The extra benefit from the last unit consumed is less than the extra cost.
• C) The enforcement of the price ceiling is extremely costly.
• D) Producers are encouraged to produce too much.
• E) A "fair" price for any good cannot be established.

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Definitions:

Rent Control

Government-imposed limits on the amount landlords can charge for leasing residential properties, intended to make housing affordable.

Short Run

A period in economics during which at least one factor of production is fixed, limiting the ability of a business to adjust fully to market changes.

Rent Control

Government-imposed limits on the amount landlords can charge tenants for lease agreements, aimed at making housing more affordable.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing companies to adjust to market changes fully.