When the Maximum Legal Price Is Set Below the Market

question 218

Multiple Choice

When the maximum legal price is set below the market price then:
I. a price floor is in effect.
II. a shortage will develop.
III. there will be lost gains from trade.
IV. there will be no impact on the quantity demanded or supplied.

• A) I and II only
• B) I, II, and III only
• C) II and III only
• D) IV only

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