Legal Limits on Prices Will Tend to Cause Misallocation of Resources

question 167

Multiple Choice

Legal limits on prices will tend to cause misallocation of resources because

• A)production (or opportunity) cost no longer corresponds to market price.
• B)people are unable to determine their preferences at the high or low price.
• C)producers no longer have incentive to be profitable.
• D)consumers no longer have incentive to spend their income efficiently.
• E)All of the above are correct.

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