Effective Price Ceilings Cause Misallocation of Resources Because Scarce Resources

question 140

True/False

Effective price ceilings cause misallocation of resources because scarce resources are usually not allocated to their highest-value uses.

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Definitions:

Tax

Mandatory financial charges imposed by a government on individuals, corporations, and transactions to fund public services and government operations.

Per-unit Burden

It refers to the cost that each unit of a product or service incurs, often considered in analyses of taxes or production costs.

Tax

A mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.