Price Controls Cause Resources to Be Misallocated By

question 28

Multiple Choice

Price controls cause resources to be misallocated by:

• A) distorting the signals of suppliers' willingness to supply and eliminating the incentives for demanders to pay.
• B) distorting the signals of demanders' willingness to pay and eliminating the incentives for suppliers to supply.
• C) distorting the incentives for suppliers to supply and eliminating the signals of demanders' willingness to pay.
• D) distorting the incentives for demanders to pay and eliminating the signals of suppliers' willingness to supply.

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Definitions:

Plato

An ancient Greek philosopher, a pivotal figure in the development of Western philosophy and the founder of the Academy in Athens.

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A concept in philosophy that suggests the existence of abstract properties or forms that universally apply to instances of various objects or ideas.

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A tragedy by the ancient Greek playwright Sophocles that tells the story of Oedipus, a man who inadvertently fulfills a prophecy that he would kill his father and marry his mother.