Legal Limits on Prices Will Tend to Cause Misallocation of Resources

question 191

Multiple Choice

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

• A)the market price does not reflect the costs of production.
• B)people are unable to determine their preferences at the high or low price.
• C)producers are able to produce less efficiently.
• D)consumers no longer have incentive to spend their income efficiently.
• E)All of these responses are correct.