Which of the Following Statements About Price Ceilings Is False

question 91

Multiple Choice

Which of the following statements about price ceilings is false?

• A)Quality often suffers when a price ceiling is imposed.
• B)Rent control is an example of a price ceiling.
• C)Poor people will always be able to buy more of the product than if the price ceiling did not exist.
• D)Price ceilings result in shortages.
• E)Just as a producer is not allowed to sell a good for more than the price ceiling, it is illegal for a consumer to pay more than the price ceiling.

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Definitions:

Surplus

A situation where the quantity supplied of a good or service exceeds the quantity demanded at the current price.

Deflationary Gap

A situation where total spending (aggregate demand) in an economy is lower than the level required to sustain full employment output, leading to deflation and unemployment.

Equilibrium GDP

The level of Gross Domestic Product at which aggregate supply equals aggregate demand, leading to an economy operating at full capacity without inflationary pressures.

Full Employment GDP

The level of gross domestic product achieved when there is no cyclical unemployment in the economy, representing an ideal economic state where all willing and able workers find employment.