Price Ceilings Which Lead to Shortages Will Impose Costs on Society

question 56

Multiple Choice

Price ceilings which lead to shortages will impose costs on society because they:

• A)will lead to long waiting lines.
• B)may result in black market prices, which are higher than the market-determined price would be.
• C)lead to a smaller quantity offered on the market.
• D)do all of the above.

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Definitions:

Constrained Resource

An essential element of production that is available in limited quantities, thereby limiting throughput.

Bottleneck

A point of congestion in a production system where the limited capacity of a process causes delays or lower output in the subsequent processes.

Profitable Use

Refers to employing assets or resources in a manner that generates income exceeding the costs incurred.

Alternative X

A hypothetical or specific alternative option in a decision-making process or analysis.